The stability of dummy variable price measures obtained from hedonic regressions

Ana Aizcorbe

No 2003-05, Finance and Economics Discussion Series from Board of Governors of the Federal Reserve System (U.S.)

Abstract: Although the stability of coefficients from hedonic regressions has received much attention recently, that of dummy variable (DV) price indexes obtained from these regressions has not. In principle, one problem translates into the other only when some prices are not observed in the data. Numerically, however, DV measures obtained from a \"typical\" specification can be quite unstable even when the number of missing prices is small. To the extent that collinearity is an important source of the problem, functional forms that use (orthogonal) fixed effects to control for quality differences across goods should yield more stable estimates. Data for Intel's microprocessors are used to illustrate these points.

Keywords: Price; indexes (search for similar items in EconPapers)
Date: 2003
New Economics Papers: this item is included in nep-mon
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Citations: View citations in EconPapers (3)

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