New Characteristics and Hedonic Price Index Numbers

Ian Crawford and J. Peter Neary

No 2019-W02, Economics Papers from Economics Group, Nuffield College, University of Oxford

Abstract: Changes in product characteristics on the extensive margin are an important and hitherto neglected dimension of quality change. Standard techniques for qualityadjusting price indices cannot handle such changes satisfactorily, which leads to an economically and statistically significant bias in the measurement of prices and real output. We combine insights from the theories of index numbers and demand for characteristics to develop a new method for incorporating changes on the extensive characteristic margin. Applied to U.K. data on new car sales, our method leads to revisions in estimated inflation rates for this commodity group that are both plausible and quantitatively important.

Keywords: Extensive and Intensive Margins of Consumption; Characteristics Model; Quality Change; Characteristics Sato-Vartia-Feenstra Index Number. (search for similar items in EconPapers)
JEL-codes: C90 C91 C92 D03 (search for similar items in EconPapers)
Pages: 36 pages
Date: 2019-08-12
New Economics Papers: this item is included in nep-mac
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Related works:
Journal Article: New Characteristics and Hedonic Price Index Numbers (2023)
Working Paper: New characteristics and hedonic price index numbers (2019)
Working Paper: New Characteristics and Hedonic Price Index Numbers (2019)
Working Paper: New Characteristics and Hedonic Price Index Numbers (2019)
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Persistent link: https://EconPapers.repec.org/RePEc:nuf:econwp:1902

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