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Convenient links for the estimation of hedonic price indexes:the case of unique, infrequently traded assets

  • Esmeralda Ramalho

    ()

    (Department of Economics and CEFAGE-UE, Universidade de Évora)

  • Joquim Ramalho

    ()

    (Department of Economics and CEFAGE-UE, Universidade de Évora)

Hedonic methods are a prominent approach in the construction of quality-adjusted price indexes. This paper shows that the process of computing such indexes is substantially simplified if arithmetic (geometric) price indexes are computed based on exponential (log-linear) hedonic functions estimated by the Poisson pseudo maximum likelihood (ordinary least squares) method. A Monte Carlo simulation study based on housing data illustrates the convenience of the links identified and the very attractive properties of the Poisson estimator in the hedonic framework.

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Paper provided by University of Evora, CEFAGE-UE (Portugal) in its series CEFAGE-UE Working Papers with number 2014_01.

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Length: 35 pages
Date of creation: 2014
Date of revision:
Handle: RePEc:cfe:wpcefa:2014_01
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