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Chained, exact and superlative hedonic price changes: estimates from microdata

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  • Christos Ioannidis
  • Mick Silver

Abstract

Scanner data are used to calculate chained, exact (and superlative) hedonic price indexes for television sets. The data source is available for a wide range of goods, the application providing an example of how this method can be more widely applied. The indexes correspond to constant utility, hedonic cost-of-living indexes. The approach improves on the existing direct method, which takes its estimates directly from the coefficients on time dummies in a hedonic regression. It also improves on the matched model method used by statistical agencies. The differences between actual price changes and exact hedonic quality-adjusted price changes are found to be substantial. Base-period and current-period weighted exact hedonic indexes are similar, thus providing good approximations to a superlative index. Estimates from the direct, dummy variable approach were compared to the superlative indexes. The disparities between the results argue for caution in the use of the direct, dummy variable approach to estimating quality-adjusted price changes.

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Bibliographic Info

Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 35 (2003)
Issue (Month): 9 ()
Pages: 1005-1014

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Handle: RePEc:taf:applec:v:35:y:2003:i:9:p:1005-1014

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References

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Cited by:
  1. Varela-Irimia, Xosé-Luís, 2011. "Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990's," Working Papers 2072/169683, Universitat Rovira i Virgili, Department of Economics.
  2. Toshihiro Okubo, 2013. "Energy-saving regulations and commodity prices," Environmental Economics and Policy Studies, Society for Environmental Economics and Policy Studies - SEEPS, vol. 15(1), pages 93-132, January.

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