10/31/2023 0 Comments Hedonic consumptionThe traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed. To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change. This change in benefit is quality change. The new version of the item may provide additional benefits or, in some cases, reduced benefits. In many categories of items, this is the primary time when price change occurs. A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. The CPI measures the average change in price over time of consumption goods and services by following the prices of a representative sample of consumption items in the retail establishments that sell them. Would you walk through another example at a more detailed level?.Can you explain how the CPI uses the hedonic regression model to estimate and apply a quality adjustment?.How does the hedonic method estimate the value of quality change?.What items in the CPI are hedonically adjusted?.Why does the CPI adjust prices for changes in quality?.Frequently Asked Questions about Hedonic Quality Adjustment in the CPI
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