Hedonic Prices Indexes for New Passenger Cars in Portugal (1997-2001)
AbstractThis paper evaluates the effects of quality change on the price index for new passenger cars in Portugal for the years 1997-2001. Hedonic regression models are studied, giving particular emphasis to the relation between the form of the price index and the specification of the hedonic equation and estimation method used. It is argued that when log-linear hedonic functions are used the effects of quality change should be evaluated using a method akin to the Oaxaca decomposition (Oaxaca R., 1973, "Male-Female Wage Differentials in Urban Labor Markets", International Economic Review, 14, 693-709), rather than using the traditional dummy variables method. The results of the empirical part of the paper indicate that the CPI component corresponding to the sales of new passenger cars may have been overestimated by as much as 2.2 percentage points per year. This corresponds to an overestimation of the overall CPI by about 0.15 percentage points per year. As a by- product of this analysis it is also possible to conclude that the quality of new cars sold in Portugal increased on average 4.8 percent per year during this period.
Download InfoIf you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
Bibliographic InfoArticle provided by Banco de Portugal, Economics and Research Department in its journal Economic Bulletin.
Volume (Year): (2002)
Issue (Month): ()
Other versions of this item:
- Reis, Hugo J. & Santos Silva, J.M.C., 2006. "Hedonic prices indexes for new passenger cars in Portugal (1997-2001)," Economic Modelling, Elsevier, vol. 23(6), pages 890-908, December.
- Hugo J. Reis & J.M.C. Santos Silva, 2003. "Hedonic Prices Indexes for New Passenger Cars in Portugal (1997- 2001)," Econometrics 0303003, EconWPA.
- Hugo J. Reis & J.M.C.Santos Silva, 2002. "Hedonic Prices Indexes for New Passenger Cars in Portugal (1997-2001)," Working Papers w200210, Banco de Portugal, Economics and Research Department.
- C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- L62 - Industrial Organization - - Industry Studies: Manufacturing - - - Automobiles; Other Transportation Equipment
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Melo, Jaime de & Messerlin, Patrick A., 1988. "Price, quality and welfare effects of European VERs on Japanese autos," European Economic Review, Elsevier, vol. 32(7), pages 1527-1546, September.
- White, Halbert, 1980. "Using Least Squares to Approximate Unknown Regression Functions," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 21(1), pages 149-70, February.
- Zvi Griliches, 1964. "Notes on the Measurement of Price and Quality Changes," NBER Chapters, in: Models of Income Determination, pages 381-418 National Bureau of Economic Research, Inc.
- Arguea, N.M. & Hsiao, C., 1992.
"Econometric Issues of Estimating Hedonic Price Functions- with an Application to the U.S. Market for Automobiles,"
9203, Southern California - Department of Economics.
- Arguea, Nestor M. & Hsiao, Cheng, 1993. "Econometric issues of estimating hedonic price functions : With an application to the U.S. market for automobiles," Journal of Econometrics, Elsevier, vol. 56(1-2), pages 243-267, March.
- Wooldridge, Jeffrey M., 1991. "On the application of robust, regression- based diagnostics to models of conditional means and conditional variances," Journal of Econometrics, Elsevier, vol. 47(1), pages 5-46, January.
- Mark A. Wynne & Diego Rodriguez-Palenzuela, 2004.
"Measurement Bias in the HICP: What do we know and What do we need to know?,"
Journal of Economic Surveys,
Wiley Blackwell, vol. 18(1), pages 79-112, 02.
- Mark A. Wynne & Diego Rodriguez-Palenzuela, 2002. "Measurement bias in the HICP: what do we know and what do we need to know?," Working Papers 02 06, Federal Reserve Bank of Dallas.
- Wynne, Mark A. & Rodriguez-Palenzuela, Diego, 2002. "Measurement bias in the HICP: what do we know, and what do we need to know?," Working Paper Series 0131, European Central Bank.
- Olympia Bover & Mario Izquierdo, 2003. "Quality-adjusted prices: hedonic methods and implications for national accounts," Investigaciones Economicas, Fundación SEPI, vol. 27(2), pages 199-238, May.
- Hoffmann, Johannes & Kurz, Claudia, 2002.
"Rent indices for housing in West Germany 1985 to 1998,"
Working Paper Series
0116, European Central Bank.
- Hoffmann, Johannes & Kurz, Claudia, 2002. "Rent indices for housing in West Germany 1985 to 1998," Discussion Paper Series 1: Economic Studies 2002,01, Deutsche Bundesbank, Research Centre.
- Triplett, Jack E, 1969. "Automobiles and Hedonic Quality Measurement," Journal of Political Economy, University of Chicago Press, vol. 77(3), pages 408-17, May/June.
- Victor Ginsburgh & Geneviève Vanhamme, 1989.
"Price differences in the EC car market: some further results,"
ULB Institutional Repository
2013/1737, ULB -- Universite Libre de Bruxelles.
- Victor GINSBURGH & Geneviève VANHAMME, 1989. "Price Differences in the EC Car Market. Some Further Results," Annales d'Economie et de Statistique, ENSAE, issue 15-16, pages 137-149.
- Laura Blow & Ian Crawford, 1998. "A quality-constant price index for new cars in the UK, 1986 to 1995," IFS Working Papers W98/12, Institute for Fiscal Studies.
- Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
- Kenneth Brown, 2000. "Hedonic price indexes and the distribution of buyers across the product space: an application to mainframe computers," Applied Economics, Taylor and Francis Journals, vol. 32(14), pages 1801-1808.
- Franklin M. Fisher & Zvi Griliches & Carl Kaysen, 1962. "The Costs of Automobile Model Changes since 1949," Journal of Political Economy, University of Chicago Press, vol. 70, pages 433.
- Bover, Olympia & Velilla, Pilar, 2002.
"Hedonic house prices without characteristics: the case of new multiunit housing,"
Working Paper Series
0117, European Central Bank.
- Bover, Olympia & Velilla Lucini, Pilar, 2002. "Hedonic House Prices Without Characteristics: The Case of New Multiunit Housing," CEPR Discussion Papers 3161, C.E.P.R. Discussion Papers.
- Yves Bourdet, 1991. "Pricing policy and quality upgrading in the Swedish car market: Do import surveillance and exchange rate instability matter?," Open Economies Review, Springer, vol. 2(3), pages 255-274, October.
- Teekens, R & Koerts, J, 1972. "Some Statistical Implications of the Log Transformation of Multiplicative Models," Econometrica, Econometric Society, vol. 40(5), pages 793-819, September.
- Ohta, Makoto & Griliches, Zvi, 1986. "Automobile Prices and Quality: Did the Gasoline Price Increases Change Consumer Tastes in the U.S.?," Journal of Business & Economic Statistics, American Statistical Association, vol. 4(2), pages 187-98, April.
- Arguea, N M & Hsiao, C & Taylor, G A, 1994.
"Estimating Consumer Preferences Using Market Data--An Application to U.S. Automobile Demand,"
Journal of Applied Econometrics,
John Wiley & Sons, Ltd., vol. 9(1), pages 1-18, Jan.-Marc.
- Arguea, N.M. & Hsiao, C. & Taylor, G.A., 1993. "Estimating Consumer Preferences Using Market Data - An Application to U.S. Automobile Demand," Papers 9316, Southern California - Department of Economics.
- Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132.
- Deaton,Angus & Muellbauer,John, 1980. "Economics and Consumer Behavior," Cambridge Books, Cambridge University Press, number 9780521296762, November.
- MERTENS, Yves & GINSBURGH, Victor, .
"Product differentiation and price discrimination in the European Community: The case of automobiles,"
CORE Discussion Papers RP
-672, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Mertens, Yves & Ginsburgh, Victor, 1985. "Product Differentiation and Price Discrimination in the European Community: The Case of Automobiles," Journal of Industrial Economics, Wiley Blackwell, vol. 34(2), pages 151-66, December.
- Machado, Jos A.F. & Santos Silva, J.M.C., 2006. "A Note On Identification With Averaged Data," Econometric Theory, Cambridge University Press, vol. 22(03), pages 537-541, June.
- Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February.
- Godfrey, Leslie G & McAleer, Michael & McKenzie, Colin R, 1988. "Variable Addition and LaGrange Multiplier Tests for Linear and Logarithmic Regression Models," The Review of Economics and Statistics, MIT Press, vol. 70(3), pages 492-503, August.
- Cowling, Keith & Cubbin, John, 1972. "Hedonic Price Indexes for United Kingdom Cars," Economic Journal, Royal Economic Society, vol. 82(327), pages 963-78, September.
- Charles L. Schultze, 2003. "The Consumer Price Index: Conceptual Issues and Practical Suggestions," Journal of Economic Perspectives, American Economic Association, vol. 17(1), pages 3-22, Winter.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Agarwal, Manoj K & Ratchford, Brian T, 1980. " Estimating Demand Functions for Product Characteristics: The Case of Automobiles," Journal of Consumer Research, University of Chicago Press, vol. 7(3), pages 249-62, December.
- White, Halbert, 1980. "A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity," Econometrica, Econometric Society, vol. 48(4), pages 817-38, May.
- Feenstra, Robert C, 1988. "Quality Change under Trade Restraints in Japanese Autos," The Quarterly Journal of Economics, MIT Press, vol. 103(1), pages 131-46, February.
- Atkinson, Scott E & Halvorsen, Robert, 1984. "A New Hedonic Technique for Estimating Attribute Demand: An Application to the Demand for Automobile Fuel Efficiency," The Review of Economics and Statistics, MIT Press, vol. 66(3), pages 417-26, August.
- Varela-Irimia, Xosé-Luís, 2011.
"Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990's,"
2072/169683, Universitat Rovira i Virgili, Department of Economics.
- Xosé-Luís Varela-Irimia, 2011. "Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990?s," Working Papers XREAP2011-11, Xarxa de Referència en Economia Aplicada (XREAP), revised Aug 2011.
- Sylvain M. Prado, 2009.
"The European used-car market at a glance: Hedonic resale price valuation in automotive leasing industry,"
AccessEcon, vol. 29(3), pages 2086-2099.
- Sylvain Prado, 2009. "The European used-car market at a glance: Hedonic resale price valuation in automotive leasing industry," EconomiX Working Papers 2009-22, University of Paris West - Nanterre la Défense, EconomiX.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (DEE-NTDD).
If references are entirely missing, you can add them using this form.