 New Characteristics and Hedonic Price Index NumbersIan Crawford and J. Peter Neary No 867, Economics Series Working Papers from University of Oxford, Department of Economics Abstract: Changes in product characteristics on the extensive margin are an important and hitherto neglected dimension of quality change. Standard techniques for quality-adjusting 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 theoretical insights from index numbers and demand for charac¬teristics to develop a new method for incorporating changes on the extensive charac¬teristic margin. Applied to data on new car sales in the U.K., 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; Sato-Vartia-Feenstra Index Numbers (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:oxf:wpaper:867 Access Statistics for this paper More papers in Economics Series Working Papers from University of Oxford, Department of Economics Contact information at EDIRC. |
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