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Car quality improvements and price indices in Spain


  • Mario Izquierdo
  • Omar Licandro
  • Alberto Maydeu


The main goals of this study are to measure quality improvements in automobile sector in Spain and to estimate the quality bias in car price index released by INE. In order to do that, we propose an alternative methodology to estimate hedonic regressions. This methodology involves classifying the "indicators" of quality of an automobile in "sub-indices" that reflect different aspects of quality, subsequently grouping the sub-indices in an overall quality index. Consequently, car quality can be measured by a readily interpretable index; and its price can be estimated with statistical accuracy in an hedonic regression where the overall quality index is used as regressor. Results indicate that the implicit quality bias in the car price index released by INE is 3.1 % per year.

Suggested Citation

  • Mario Izquierdo & Omar Licandro & Alberto Maydeu, "undated". "Car quality improvements and price indices in Spain," Working Papers 2001-18, FEDEA.
  • Handle: RePEc:fda:fdaddt:2001-18

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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    2. repec:cor:louvrp:-1655 is not listed on IDEAS
    3. W. Erwin Diewert, 2003. "Hedonic Regressions. A Consumer Theory Approach," NBER Chapters,in: Scanner Data and Price Indexes, pages 317-348 National Bureau of Economic Research, Inc.
    4. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, January.
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    Cited by:

    1. Omar Licandro & Antonio R. Sampayo, 2006. "The effects of replacement schemes on car sales: the Spanish case," Investigaciones Economicas, Fundación SEPI, vol. 30(2), pages 239-282, May.
    2. Xosé-Luís Varela-Irimia, 2014. "Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990s," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(4), pages 419-455, November.

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    1. Studies on the automobile industry


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