HEDONIC IMPUTATION AND THE PRICE INDEX PROBLEM: AN APPLICATION TO HOUSING |
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| Authors: | ROBERT J. HILL DANIEL MELSER |
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| Affiliation: | 1. Hill: Professor, School of Economics, University of New South Wales, Sydney, NSW 2052, Australia. Phone 61‐2‐93853076, Fax 61‐2‐93136337, E‐mail r.hill@unsw.edu.au;2. Funding from the Australian Research Council Discovery Grant DP0667209 and Linkage Grant LP0347618 in collaboration with the Australian Bureau of Statistics is gratefully acknowledged. We also thank Australian Property Monitors for supplying the data.;3. Melser: Lecturer, Department of Economics, Monash University, Caulfield Campus, Melbourne, Vic 3145, Australia. Phone 61‐3‐99052478, Fax 61‐3‐99055476, E‐mail danielmelser@buseco.monash.edu.au |
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| Abstract: | In this study, we show how use of the hedonic imputation method complicates the price index problem. In addition to the usual choice between formulas such as Fisher and Törnqvist, the fact that index compilers have some discretion over which prices are imputed implies that it is necessary to choose as well between different varieties of each formula. The functional form of the hedonic model must also be taken into account. We illustrate the importance of these issues in a housing context using house price data for three regions in Sydney over a 3‐yr period. (JEL C43, E31, O47, R31) |
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