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Effects of Quality Changes on the Price Index: A Hedonic Approach to the Estimation of a Quality Adjusted Price Index for Personal Computers in Japan

Author

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  • Shigenori Shiratsuka

    (Research Division 1, Institute for Monetary and Economic Studies, Bank of Japan)

Abstract

This paper studies the effects of quality changes on Japan's CPI by estimating a quality adjusted price index (hedonic price index) for discounted personal computers during 1990-94. According to the result, quality adjusted prices for personal computers in Japan have declined at an annual rate of 20-25% since 1990, reducing consumer durable CPI by 0.2% points per annum and overall CPI by 0.01% points. As consumer durables are apt to be affected by constant quality improvements, this result suggests that the conventional price index for consumer durables is likely to have substantially underestimated real declines in prices.

Suggested Citation

  • Shigenori Shiratsuka, 1995. "Effects of Quality Changes on the Price Index: A Hedonic Approach to the Estimation of a Quality Adjusted Price Index for Personal Computers in Japan," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 13(1), pages 17-52, July.
    • Handle: RePEc:ime:imemes:v:13:y:1995:i:1:p:17-52
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    File URL: http://www.imes.boj.or.jp/research/papers/english/me13-1-2.pdf
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    Citations

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    Cited by:

    1. David Prentice & Xiangkang Yin, 2004. "Constructing a Quality‐Adjusted Price Index for a Heterogeneous Oligopoly," Manchester School, University of Manchester, vol. 72(4), pages 423-442, July.
    2. Yumi Saita, 2003. "Land Prices in the Tokyo Metropolitan Area: A Hedonic Analysis of Judicial Auction Prices," Bank of Japan Working Paper Series 03-E-4, Bank of Japan.
    3. Masato Shizume, 2018. "Black Market Prices during World War II in Japan: An Estimate Using the Hedonic Approach," IMES Discussion Paper Series 18-E-17, Institute for Monetary and Economic Studies, Bank of Japan.

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