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Durable goods, price indexes and quality change: an application to automobile prices in Italy, 1988-1998

  • Tomat, Gian Maria
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    The paper analyzes the problems of measurement of durable consumer prices posed by quality change. Theoretical price indexes are defined and used to analyze several empirical methods of estimation of quality adjusted price indexes. The paper shows that hedonic regressions and other quality adjustment methods commonly used by statistical agencies do not always provide reliable price estimators. The analysis suggests that the application of methods of measurement based on chain indexes may remove the measurement problems associated with quality change. The paper includes an application of the theory to the analysis of automobile prices in Italy during the period 1988-1998 JEL Classification: C43, C51, D91

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    Paper provided by European Central Bank in its series Working Paper Series with number 0118.

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    Date of creation: Jan 2002
    Date of revision:
    Handle: RePEc:ecb:ecbwps:20020118
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    1. Ehrmann, Michael & Worms, Andreas, 2001. "Interbank lending and monetary policy transmission - evidence for Germany," Working Paper Series 0073, European Central Bank.
    2. Eugenio Gaiotti & Andrea Generale, 2001. "Does monetary policy have asymmetric effects? A look at the investment decisions of Italian firms," Temi di discussione (Economic working papers) 429, Bank of Italy, Economic Research and International Relations Area.
    3. P. Hartmann & S. Straetmans & C. G. de Vries, 2004. "Asset Market Linkages in Crisis Periods," The Review of Economics and Statistics, MIT Press, vol. 86(1), pages 313-326, February.
    4. von Kalckreuth, Ulf, 2002. "Monetary Transmission in Germany: New Perspectives on Financial Constraints and Investment Spending," Royal Economic Society Annual Conference 2002 179, Royal Economic Society.
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    7. Angelini, Elena & Henry, Jérôme & Mestre, Ricardo, 2001. "A multi-country trend indicator for euro area inflation: computation and properties," Working Paper Series 0060, European Central Bank.
    8. Michael Ehrmann, 2004. "Firm Size and Monetary Policy Transmission – Evidence from German Business Survey Data," CESifo Working Paper Series 1201, CESifo Group Munich.
    9. Fabiani, Silvia & Mestre, Ricardo, 2001. "A system approach for measuring the euro area NAIRU," Working Paper Series 0065, European Central Bank.
    10. Gropp, Reint & Kostial, Kristina, 2000. "The disappearing tax base: is foreign direct investment eroding corporate income taxes?," Working Paper Series 0031, European Central Bank.
    11. Elena Angelini & Jérôme Henry & Ricardo Mestre, 2001. "Diffusion index-based inflation forecasts for the euro area," BIS Papers chapters, in: Bank for International Settlements (ed.), Empirical studies of structural changes and inflation, volume 3, pages 109-138 Bank for International Settlements.
    12. 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.
    13. Brent R. Moulton & Karin E. Moses, 1997. "Addressing the Quality Change Issue in the Consumer Price Index," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 305-366.
    14. De Fiore, Fiorella, 2000. "The optimal inflation tax when taxes are costly to collect," Working Paper Series 0038, European Central Bank.
    15. Quiro, G.P. & Mendizabal, H.R., 2001. "The Daily Market for Funds in Europe: Has Something Changed with the EMU," Papers 67, Quebec a Montreal - Recherche en gestion.
    16. De Fiore, Fiorella, 2000. "Can indeterminacy explain the short-run non-neutrality of money?," Working Paper Series 0032, European Central Bank.
    17. Camacho, Maximo & Pérez Quirós, Gabriel, 2000. "This is what the US leading indicators lead," Working Paper Series 0027, European Central Bank.
    18. De Bandt, Olivier & Mongelli, Francesco Paolo, 2000. "Convergence of fiscal policies in the euro area," Working Paper Series 0020, European Central Bank.
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