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Estimating hedonic price indexes for personal computers in russia: Case of Yekaterinburg

Author

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  • Parkhomenko, Alexander
  • Redkina, Anastasia
  • Maslivets, Olga

Abstract

Economists have been noting for decades that Consumer Price Index (CPI) in the developed countries is overstating inflation by 0,5−2,0% per year. A significant part of the bias is due to the presence of technology products and differentiated products in the CPI basket. An increase share of these products in the Russian CPI may also lead to a substantial upward bias. Nowadays hedonic indices are believed to be the most efficient way to reduce this bias. They can be used in two ways: to estimate the bias in CPI and to elaborate alternative official price indices for information and communication technology (ICT) products. We estimate a 25% fall in the price of personal computers for 20 months (03.04-11.05) using this method. A 25−44% upward bias in price index for PC in Russia was also calculated. We have found that the Russian CPI could be upward biased by 0,18-0,32% per year due to new goods and quality change effects for PC (given 1% expenditure share).

Suggested Citation

  • Parkhomenko, Alexander & Redkina, Anastasia & Maslivets, Olga, 2007. "Estimating hedonic price indexes for personal computers in russia: Case of Yekaterinburg," MPRA Paper 3135, University Library of Munich, Germany.
    • Handle: RePEc:pra:mprapa:3135
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    References listed on IDEAS

    as
    1. Shane M. Greenstein & James B. Wade, 1998. "The Product Life Cycle in the Commercial Mainframe Computer Market, 1968-1982," RAND Journal of Economics, The RAND Corporation, vol. 29(4), pages 772-789, Winter.
    2. Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
    3. Shiratsuka, Shigenori, 1999. "Measurement Errors in the Japanese Consumer Price Index," Monetary and Economic Studies, Institute for Monetary and Economic Studies, Bank of Japan, vol. 17(3), pages 69-102, December.
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    Cited by:

    1. Jakub Rybacki & Tamara Bińczak & Filip Kaczmarek, 2018. "Is HICP really harmonized? Problems with quality adjustments and new products," Collegium of Economic Analysis Annals, Warsaw School of Economics, Collegium of Economic Analysis, issue 53, pages 97-116.

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    More about this item

    Keywords

    CPI; price index; hedonic price index; CPI bias;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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