The Hedonic Country Product Dummy Method and Quality Adjustments for Purchasing Power Parity Calculations
IMF Working Papers, December 1, 2009
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- The Hedonic Country Product Dummy Method and Quality Adjustments for Purchasing Power Parity Calculations
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Bibliographic details
- Authors: Mick Silver
- Published: December 1, 2009
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451874167.001
Overview
- Focus: Analytical framework to improve economy-wide purchasing power parity (PPP) estimates from the 2005 International Comparison Program (ICP).
- Core concern: Parity estimates for 155 basic expenditure headings were mainly estimated using country product dummy (CPD) regressions and may be inefficient and biased.
Problem statement
- Identified sources of inefficiency and omitted variable bias:
- Use of average prices across outlets as the left-hand-side variable in CPD regressions.
- Inability to effectively include quality-adjusted prices of non-comparable replacements when products in outlets do not match required specifications.
Methodological contribution
- Proposal: An analytical framework based on panel data and hedonic CPD regressions.
- Intended effect: Ameliorate the identified sources of bias and inefficiency in PPP estimation.
Content in this bundle
- _wp09271 - Annex 2 demonstrates this e