How to order
IMF Publications

Working Papers in full text
2014 2013 2012 2011 2010 2009 2008 2007 2006 2005 2004 2003 2002 2001 2000 1999 1998 1997 All


Other research-related activities and publications of the IMF can be found at IMF Research

Free Email Notification

Receive emails when we post new items of interest to you.

Subscribe or Modify your profile



The Hedonic Country Product Dummy Method and Quality Adjustments for Purchasing Power Parity Calculations

Author/Editor: Silver, Mick
Authorized for Distribution: December 1, 2009
Electronic Access: Free Full Text (PDF file size is 1,034KB)
Use the free Adobe Acrobat Reader to view this PDF file.
 
Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: The 2005 International Comparison Program's (ICP) estimates of economy-wide purchasing power parity (PPP) are based on parity estimates for 155 basic expenditure headings, mainly estimated using country product dummy (CPD) regressions. The estimates are potentially inefficient and open to omitted variable bias for two reasons. First, they use average prices across outlets as the left-hand-side variable. Second, quality-adjusted prices of non-comparable replacements, required when products in outlets do not match the required specifications, cannot be effectively included. This paper provides an analytical framework based on panel data and hedonic CPD regressions for ameliorating these sources of bias and inefficiency.
 
Order a print copy
Series: Working Paper No. 09/271
Subject(s): Consumer price indexes | Cross country analysis | Economic models | Price structures | Prices | Purchasing power parity
Author's keyword(s): Purchasing Power Parity; Country-Product-Dummy Method; Hedonic Regression; International Comparisons Program; PPP; CPD.
 
English  
    Published:   December 1, 2009        
            Format:   Paper
    Stock No:   WPIEA2009271   Pages:   28
    Price:   US$18.00 (Academic Rate: US$18.00 )
       
     
Please address any questions about this title to publications@imf.org.