The Econometric Foundations of Hedonic Elementary Price Indices
AbstractHedonic methods are currently considered state-of-the-art for handling quality changes when compiling consumer price indices. The present article proposes first a mathematical description of characteristics and of elementary aggregates. In a following step, a hedonic econometric model is formulated and hedonic elementary population indices are defined. These indices extend from simple indices based on some average quality to universal formulae that incorporate the full quality spectrum of the respective elementary aggregate. We emphasise that population indices are unobservable economic parameters that need to be estimated by suitable sample indices. It is shown that most of the hedonic elementary index formulae used in practice are sample versions of particular hedonic elementary population indices.
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Bibliographic InfoPaper provided by Department of Quantitative Economics, University of Freiburg/Fribourg Switzerland in its series DQE Working Papers with number 12.
Length: 19 pages
Date of creation: 24 Apr 2009
Date of revision:
Note: Room document at the 11th Ottawa Group meeting (Neuchâtel 2009)
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Consumer price index; hedonic regression; elementary aggregate; hedonic econometric model; hedonic elementary price index;
Find related papers by JEL classification:
- 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
This paper has been announced in the following NEP Reports:
- NEP-ALL-2009-05-23 (All new papers)
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