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Convenient links for the estimation of hedonic price indexes: the case of unique, infrequently traded assets
Author(s) -
Ramalho Esmeralda A.,
Ramalho Joaquim J.S.
Publication year - 2014
Publication title -
statistica neerlandica
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.52
H-Index - 39
eISSN - 1467-9574
pISSN - 0039-0402
DOI - 10.1111/stan.12024
Subject(s) - hedonic index , estimator , poisson distribution , econometrics , mathematics , exponential function , estimation , monte carlo method , poisson process , statistics , price index , mathematical optimization , economics , mathematical analysis , management
Hedonic methods are a prominent approach in the construction of quality‐adjusted price indexes. This paper shows that the process of computing such indexes is substantially simplified if arithmetic (geometric) price indexes are computed based on exponential (log‐linear) hedonic functions estimated by the Poisson pseudo‐maximum likelihood (ordinary least squares) method. A Monte Carlo simulation study based on housing data illustrates the convenience of the links identified and the very attractive properties of the Poisson estimator in the hedonic framework.