Keywords: Hedonic, price index
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.
Full paper (687 KB PDF)
Home | FEDS | List of 2003 FEDS papers
To comment on this site, please fill out our feedback form.
Last update: February 21, 2003