Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990?s

Xose-Luis Varela-Irimia

No XREAP2011-11, Working Papers from Xarxa de Referència en Economia Aplicada (XREAP)

Abstract: This paper computes and compares alternative quality-adjusted price indexes for new cars in Spain in the period 1990-2000. The proposed hedonic approach simultaneously controls for time-invariant unobserved product e¤ects and time-variant unobserved quality changes, that are assumed to be captured by model age e¤ects. The results show that the non-adjusted price index largely overstates the increase in the cost of living induced by changes in car prices and that previous evidence for this market have not measured the real extent of that bias, probably due to the omission of controls for unobservables. It is also shown that omitting age effects can also lead to misleading conclusions. The estimated price indexes give also some insights on what could have been the determinants of price evolution in the Spanish car market.

Keywords: Hedonic price indexes; Spanish car market; car prices; CPI; Cost of living. (search for similar items in EconPapers)
JEL-codes: L11 L13 (search for similar items in EconPapers)
Pages: 45 pages
Date: 2011-08, Revised 2011-08
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (33)

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http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-11.pdf First version, 2011 (application/pdf)
http://www.xreap.cat/RePEc/xrp/pdf/XREAP2011-11.pdf Revised version, 2011 (application/pdf)

Related works:
Journal Article: Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990s (2014)
Working Paper: Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990's (2011)
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