Hedonic Imputation and the Price Index Problem: An Application to Housing

Economic Inquiry, Vol. 46, Issue 4, pp. 593-609, October 2008

17 Pages Posted: 27 Oct 2008

See all articles by Robert J. Hill

Robert J. Hill

UNSW Australia Business School, School of Economics

Daniel Melser

UNSW Australia Business School, School of Economics

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 Classification: C43, E31, O47, R31

Suggested Citation

Hill, Robert James and Melser, Daniel, Hedonic Imputation and the Price Index Problem: An Application to Housing. Economic Inquiry, Vol. 46, Issue 4, pp. 593-609, October 2008, Available at SSRN: https://ssrn.com/abstract=1288866 or http://dx.doi.org/10.1111/j.1465-7295.2007.00110.x

Robert James Hill

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia

Daniel Melser

UNSW Australia Business School, School of Economics ( email )

High Street
Sydney, NSW 2052
Australia
+61 2 9385 1567 (Phone)
+61 2 9313 6337 (Fax)

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