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

_IMF Working Papers, December 1, 2009_

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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

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### 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.

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/the-hedonic-country-product-dummy-method-and-quality-adjustments-for-purchasing-power-parity-23420_