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Car quality improvements and price indices in Spain

Author

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  • Mario Izquierdo
  • Omar Licandro
  • Alberto Maydey

Abstract

The main goals of this study are to measure quality improvements in automobile sector in Spain and to estimate the quality bias in car price index released by INE. In order to do that, we propose an alternative methodology to estimate hedonic regressions. This methodology involves classifying the "indicators" of quality of an automobile in "sub-indices" that reflect different aspects of quality, subsequently grouping the sub-indices in an overall quality index. Consequently, car quality can be measured by a readily interpretable index; and its price can be estimated with statistical accuracy in an hedonic regression where the overall quality index is used as regressor. Results indicate that the implicit quality bias in the car price index released by INE is 3.1 % per year.
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Suggested Citation

  • Mario Izquierdo & Omar Licandro & Alberto Maydey, "undated". "Car quality improvements and price indices in Spain," Studies on the Spanish Economy 121, FEDEA.
    • Handle: RePEc:fda:fdaeee:121
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    References listed on IDEAS

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    1. repec:ucp:bknber:9780226304557 is not listed on IDEAS
    2. Salvador Barrios & Juan José de Lucio, 2003. "Economic Integration and Regional Business Cycles: Evidence from the Iberian Regions," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 65(4), pages 497-515, September.
    3. Mario Izquierdo & Omar Licandro & Alberto Maydeu, 2001. "Car quality improvements and price indices in Spain," Estudios Económicos, Banco de España, number 72.
    4. Rosa M. Urbanos-Garrido, "undated". "Measurement of Inequity in the Delivery of Public Health Care: Evidence from Spain (1997)," Working Papers 2001-15, FEDEA.
    5. repec:cor:louvrp:-1655 is not listed on IDEAS
    6. W. Erwin Diewert, 2003. "Hedonic Regressions. A Consumer Theory Approach," NBER Chapters, in: Scanner Data and Price Indexes, pages 317-348, National Bureau of Economic Research, Inc.
    7. Andrada-Félix Julián & Fernadez-Rodriguez Fernando & Garcia-Artiles Maria-Dolores & Sosvilla-Rivero Simon, 2003. "An Empirical Evaluation of Non-Linear Trading Rules," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 7(3), pages 1-32, October.
    8. Mario Izquierdo & Omar Licandro & Alberto Maydeu, 2001. "Car quality improvements and price indices in Spain," Estudios Económicos, Banco de España, number 72.
    9. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
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    Cited by:

    1. Omar Licandro & Antonio R. Sampayo, 2006. "The effects of replacement schemes on car sales: the Spanish case," Investigaciones Economicas, Fundación SEPI, vol. 30(2), pages 239-282, May.
    2. Galarraga, Ibon & Ramos, Ana & Lucas, Josu & Labandeira, Xavier, 2014. "The price of energy efficiency in the Spanish car market," Transport Policy, Elsevier, vol. 36(C), pages 272-282.
    3. Mario Izquierdo & Omar Licandro & Alberto Maydeu, 2001. "Car quality improvements and price indices in Spain," Estudios Económicos, Banco de España, number 72.
    4. Mark A. Wynne & Diego Rodriguez‐Palenzuela, 2004. "Measurement Bias in the HICP: What do we know and What do we need to know?," Journal of Economic Surveys, Wiley Blackwell, vol. 18(1), pages 79-112, February.
    5. Xosé-Luís Varela-Irimia, 2014. "Age effects, unobserved characteristics and hedonic price indexes: The Spanish car market in the 1990s," SERIEs: Journal of the Spanish Economic Association, Springer;Spanish Economic Association, vol. 5(4), pages 419-455, November.
    6. Juan S. Mora-Sanguinetti, 2010. "The effect of institutions on European housing markets: An economic analysis," Estudios Económicos, Banco de España, number 77.
    7. Anna Matas & Josep-Lluis Raymond, 2009. "Hedonic prices for cars: an application to the Spanish car market, 1981-2005," Applied Economics, Taylor & Francis Journals, vol. 41(22), pages 2887-2904.

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