Mick Silver

• PhD
• Principle Statistical Methodologist at International Monetary Fund

Hedonic regressions are widely used and recommended for property price index (PPI) measurement. Hedonic PPIs control for changes in the quality-mix of properties transacted that can confound measures of change in average property prices. The widespread adoption of the hedonic approach is primarily due to the increasing availability, in this digital...

Commercial property price indices (CPPIs) should be based on market transaction prices. Yet in monitoring average price changes over time price data can be sparse and the properties transacted each period of a different quality-mix. Due to the heterogeneity of commercial property, CPPI measurement requires a quality-mix adjustment so that the price...

Abstract: Hedonic regressions are used for residential property price index (RPPI) measurement to control for changes in the quality-mix of properties transacted. This paper consolidates the confusing array of existing approaches and methods of implementation. It further develops an innovative form of weighting at the (elementary) level of the indi...

Hedonic regressions are used for property price index measurement to control for changes in the quality-mix of properties transacted. The paper consolidates the hedonic time dummy approach, characteristics approach, and imputation approaches. A practical hedonic methodology is proposed that (i) is weighted at a basic level; (ii) has a new (quasi-)...

This paper provides an overview of statistical measurement issues relating to alternative measures of core inflation, and the criteria for choosing among them. The approaches to measurement considered include exclusion-based methods, imputation methods, limited influence estimators, reweighting, and economic modeling. Criteria for judging which app...

House price indexes (HPIs) while particularly important to the analysis of recessions, are prone to methodological and coverage differences which can undermine both within-country and cross-country economic analysis. The paper first uses a panel data set of 157 quarterly HPIs from 24 countries, along with associated measurement variables, to report...

Transaction-price residential (house) and commercial property price indexes (RPPIs and CPPIs) have inherent problems of sparse data on heterogeneous properties, more so CPPIs. In an attempt to control for heterogeneity, (repeat-sales and hedonic) panel data regression frameworks are typically used for estimating overall price change. We address the...

A key element in the build-up to the global recession and subsequently was the movement in house price indexes (HPIs). These indexes are particularly prone to methodological and coverage differences which can undermine both within-country and cross-country economic analysis. The paper outlines key measurement issues and reports on empirical work us...

Consumer price indexes (CPIs) are compiled at the higher (weighted) level using Laspeyres-type arithmetic averages. This paper questions the suitability of such formulas and considers two counterpart alternatives that use geometric averaging, the Geometric Young and the (price-updated) Geometric Lowe. The paper provides a formal decomposition and u...

No abstract available.

The IMF’s main uses of the International Comparison Program’s (ICP) estimates of purchasing power parity (PPP)-adjusted Gross Domestic Product (GDP) are as an element of the formula used to help guide decisions on its members’ quotas and in the World Economic Outlook (WEO). The paper outlines these uses and considers measurement issues particularly...

There are two sides to unit value indices. The first is their widespread and unwarranted use based on customs data as surrogates for price relatives of product groups of exports and imports. For the aggregation of heterogeneous items, superlative price indices are best and unit value indices are biased. The second is the widespread and unwarranted...

The 2005 International Comparison Program's (ICP) estimates of economy-wide purchasing power parity (PPP) are based on parity estimates for 155 basic expenditure headings, mainly estimated using country product dummy (CPD) regressions. The estimates are potentially inefficient and open to omitted variable bias for two reasons. First, they use avera...

Index number theory informs us that if data on matched prices and quantities are available, a superlative index number formula is best to aggregate heterogeneous items, and a unit value index to aggregate homogeneous ones. The formulas can give very different results. Neglected is the practical case of broadly comparable items. This paper provides...

This chapter deals with the “direct characteristics method” approach, in which the index change between two periods is computed using separate hedonic functions estimated for each period. It compares this method, which is called the “hedonic imputation method,” to the usual time dummy approach to hedonic regressions, and derives the exact condition...

Unit value export and import indices compiled from returns to customs authorities are often used as surrogates for price indices in the analysis of inflation transmission, terms of trade (effects), and to deflate import and export value series to derive volume series. Their widespread use is mainly due to their low cost relative to establishment pr...

Statistical offices try to match item models when measuring inflation between two periods. However, for product areas with a high turnover of differentiated models, the use of hedonic indexes is more appropriate since they include the prices and quantities of unmatched new and old models. The two main approaches to hedonic indexes are hedonic imput...

Statistical offices try to match item models when measuring inflation between two periods. However, for product areas with a high turnover of differentiated models, the use of hedonic indexes is more appropriate since they include unmatched new and old models. There are two main competing approaches to hedonic indexes are hedonic imputation (HI) in...

Hedonic methods are currently considered state-of-the-art for handling quality changes when compiling consumer price indices. The present article proposes first a mathematical description of characteristics and of elementary aggregates. In a following step, a hedonic econometric model is formulated and hedonic elementary population indices are defi...

Unit value export and import indices compiled from returns to customs authorities are often used as surrogates for price indices in the measurement of inflation transmission, terms of trade (effects), and to deflate import and export value series to derive volume series. Their widespread use is mainly due to their relatively low cost compared with...

This paper looks at some of the factors imposing on the resourcing of R&D in the face of fluctuating demand. R&D has various features that differentiate it from other aspects of corporate activity and consequently managerial strategies for dealing with R&D may vary substantially. The implications for R&D strategies and the acquisition of technology...

This paper provides an overview of statistical measurement issues relating to alternative measures of core inflation and the criteria for choosing among them. The approaches to measurement considered include exclusion-based methods, limited influence estimators, reweighting, and economic modeling. Criteria for judging which approach to use include...

Statistical offices try to match item models when measuring inflation between two periods. For product areas with a high turnover of differentiated models, however, the use of hedonic indexes is more appropriate since they include the prices and quantities of unmatched new and old models. The two main approaches to hedonic indexes are hedonic imput...

This paper provides an overview of statistical measurement issues relating to alternative measures of core inflation, and the criteria for choosing among them. The approaches to measurement considered include exclusion-based methods, imputation methods, limited influence estimators, reweighting, and economic modeling. Criteria for judging which app...

The Consumer Price Index Manual (2004) provides guidelines for aggregation formulas that are promulgated at IMF training courses and technical assistance missions. This paper develops elementary level aggregation theory to better inform users and compilers. Most countries use either the Dutot or Jevons index formula. These formulas generally give d...

This paper provides a survey on studies that analyze the macroeconomic effects of intellectual property rights (IPR). The first part of this paper introduces different patent policy instruments and reviews their effects on R&D and economic growth. This part also discusses the distortionary effects and distributional consequences of IPR protection a...

This article considers the trade-off between two types of bias in the compilation of purchasing power parity (PPP) indices. The first is from the poor coverage of the items compared, or out-of-sample bias, when relatively tight specifications are used to define the items compared. The second is inappropriate quality comparisons, or in-sample bias,...

We consider three approaches to estimating quality-adjusted price changes: (i) the dummy variable approach from a hedonic regression, (ii) a superlative or exact hedonic index and (iii) a matching technique-a technique akin to that used by statistical offices. The dummy variable approach is prevalent in the literature and has been used for independ...

Scanner data are used to calculate chained, exact (and superlative) hedonic price indexes for television sets. The data source is available for a wide range of goods, the application providing an example of how this method can be more widely applied. The indexes correspond to constant utility, hedonic cost-of-living indexes. The approach improves o...

This paper uses scanner data from the bar-code readers of retailers to provide estimates of inter-country price parities at the level of the basic heading. The use of such data is appealing given its extensive coverage of transactions, information on weights, prices and characteristics of items at a highly detailed level. The study uses dummy varia...

The Retail Prices Index (RPI) is one of the UK’s most important macroeconomic indicators, as well as being used for indexation/adjustments for inflation to wages and benefits. This paper argues that the dynamic changes in product markets and consumers’ responses to price changes need to be incorporated into the RPI if it is to effectively measu...

The results from different index number formulae can differ and can do so substantially. The main criteria for explaining such differences, and governing choice between them, are their ability to satisfy desirable test properties—the axiomatic approach—and their correspondence with plausible substitution behavior as predicted from economic theory....

This chapter explores the alternative approaches to using scanner data for adjusting prices for quality change. It also compares the results of the three methods of measuring quality-adjusted price changes using scanner data: time dummy variable approach, exact (and superlative) hedonic indexes, and matching procedure. The superlative matched index...

The advent of bar-code, retail scanner data provides an alternative data source for the compilation of consumer price indexes. This paper outlines the nature and merits of such data for this purpose. The data allows aggregation via superlative index number formulae at a very elementary level and provides superior coverage to conventional sources. H...

This paper examines the potential of a Neural Network (NN) approach to the analysis of ‘hedonic’ regressions, in which price is dependent on quality characteristics. The aim of the regressions is to measure, using objective data, the valuation consumers place on these characteristics. A neural network approach is employed because of potential nonli...

Hedonic regressions are used in the measurement of quality-adjusted price changes. Price is regressed on a set of characteristics of a sample of items and the estimated equation is used in a number of ways to undertake adjustments for quality changes. Statistical offices use the coefficients, or predicted prices, to adjust prices for quality when a...

Abstract Statistical offices use ,the matched ,models ,method ,to compile ,consumer ,price indices (CPIs) to measure,inflation. Price collectors record the prices of a ,sample ,of models ,or varieties of selected products existing in period t,and then continue to record the prices of these same matched models in subsequent,periods t+n. The matched,...

This paper develops a model of the volatility of consumer purchase behaviour and applies the model to the market for tea by using Nielsen scanner panel data. The distinction between volatility and switching between brands is outlined and a measure of the volatility of purchase behaviour is related to the extent of switching, purchase intensity, pro...

This paper outlines the potential use of bar-code scanner data from retailers for the measurement of inflation. The source benefits from its extensive coverage in providing data on prices, quantities and values of transactions of each model of a good sold. Relative weights can thus be ascribed to price changes in both base and current months at a h...

There is an emerging literature in the field of hedonic regressions which successfully applies flexible functional forms. In contrast, numerous authors report hedonic regressions with relatively simple functions, often with little or no attempt to consider interaction terms and higher level powers. Such simple functions perform relatively well in s...

This paper provides new evidence on the relationship between relative price variability and inflation. The model uses a consistently defined data set for nine European countries. It benefits from the inclusion and testing of the effects of macroeconomic variables and the incorporation into the measures of inflation and dispersion adjustments for ti...

This paper uses scanner data to generate estimates of quality‐adjusted price changes for video‐recorders. We use hedonic regressions to derive estimates of the changing worth of each quality component. These are then applied to weighted changes in the mix of quality attributes of products to derive estimates of quality‐adjusted price (QAP) changes....

This paper provides the results of an empirical study of the dispersion of consumer price inflation for each of 19 product groups across 11 European countries using monthly data covering the 1980s. The study relates the degree of inflation dispersion in a market to the mean inflation rate. Thus, we show how differential price changes across Europea...

Abstract This paper considers the methods,of quality adjustment in the compilation of consumer price indices (CPIs) which arises when a variety is no longer available and a matched,comparison oflike with like cannot take place. In such cases an implicit or explicit quality adjustment is necessary so that the price comparison,of the new variety with...

This study provides results for an hedonic regression for VCRs in the UK using relatively exhaustive scanner (bar-code) data. Specific issues addressed are sample selectivity bias, given a substantial proportion of the models have limited sales, incorporation of a proxy for the price-cost margin, the bundling of characteristics in new models and th...

Acknowledgements are due to GfK Marketing Services Ltd for help with the data and Katherine Abraham (BLS), Jörgen Dalén (Statistics Sweden), Erwin Diewert (UBC), Bohden Szulc (Statistics Canada), Jack Triplett (Brookings) and Ralph Turvey (LSE) for comments at the 5th International Working Group on Price Indices, BLS, Washington DC, 1998. Helpful c...

This paper presents the results of market share modelling for individual segments of the UK tea market using scanner panel data. The study is novel in its introduction of the use of volatility as one of the bases for segmentation, others being usage, loyalty or switching between product types and product forms. The segmentation is undertaken on an...

This paper is concerned with the econometric modelling of prices of similar goods of different vintages coexisting in a market. Updated models of branded consumer durables are often launched annually. Of interest is not only the differential pricing over the life of the update, but the effect of the update on the prices of existing vintages of the...

The importance of adjusting for quality changes in the measurement of consumer prices, and the role hedonic regressions can play in achieving this, is well recognised. However, the use of such regressions can take different forms, including (i) adjustments by statistical offices for non-comparable substitution in the matched models method, (ii) dir...

Much attention has been given to the estimation of hedonic regressions given their potential use as a means to adjust consumer and producer price indices for quality changes. However, there has been warranted criticism over the methods used, particularly relating to the econometric specification of the models. Much of the criticism has arisen from...

Of interest to marketing managers are estimates of the 'worth' consumers attribute to characteristics of a product. For television sets such characteristics would include screen sizes, possession of features such as nicom stereo and the make. This paper uses scanner data to show how hedonic regressions can provide such estimates. The estimates are...

This paper provides the results of an hedonic regression for UK televisions formulated as an adjustment matrix to provide a practical tool for quality adjustment to complement the matched models method. The study argues that hedonic adjustments are particularly suitable for consumer durables where 'pent-up' price changes at the time of model change...

Inflation targeting central banks will be hampered without good models to assist them to be forward-looking. Many current inflation models fail to forecast turning points adequately, because they miss key underlying long-run influences. The world is on the cusp of a dramatic turning point in inflation. If inflation falls rapidly, such models can un...

This paper argues for the use of scanner data from EPOS systems for use in the compilation of consumer price indices. A number of methods of calculating micro-indices from such data are outlined. Scanner data for color television sets in the United Kingdom are used as an example. The Tornqvist chained index is used as a benchmark against which alte...

This paper identifies the extent to which price changes for individual product groups within a consumer price index (CPI) are dispersed. This is of importance because of our concern with the differential economic effect of inflation on households, the representativeness of CPIs and the widely held theory in economics that increased dispersion of pr...

This paper describes the use of cluster analysis to determine market segments in the babyfood market in Britain. The cluster analysis uses data from a panel of consumers and is applied to buyer behaviour variables, the resulting segments being related to the demographic characteristics of the mothers. The scale of measurement used is the ratio scal...

This paper examines the effects of various weighting systems and use of alternative formulae on measures of inflation for monthly comparisons for nine European countries during the 1980s. It aims to isolate both the effects of untimely weights (due to delays in collection and compilation) and of the substitution of the Törnqvist formula for that of...

The concern of this paper is with the much neglectecd area of footnotes to statistical tables. The role of footnotes in a statistical metainformation system is Qutlined with particular emphasis being given to user (as opposed to producer) need. Footnotes are placed within the user’s information context and their role and form analysed. The analysis...

This paper provides a framework for measuring the terms-of-trade effect for an enterprise. This effect is the impact on the organization of changes in input to output prices as well as in the prices of goods and service upon which the income is utilized. The measurement of the effect is outlined with illustrative data and applied to the German Tele...

This paper develops a model for forecasting rents for the UK retail property market. The model is estimated at both the national and regional level using OLS and SURE respectively. Particular attention is devoted to the multicollinearity of the model, an issue often not considered in multivariate forecasting since the predicted values of models suf...

An important, though much neglected aspect of quality management is improving the quality of the managers themselves. However, recent studies has shown there to be a dearth of management training in British industry. This paper summarizes managerial attitudes to training by depriving principal components of attitudinal statements. Human capital the...

The relative performance of manufacturing industry in Wales and the UK is appraised using a range of performance measures related to a number of concepts of efficiency, which are outlined. The four measurement approaches are: productivity analysis and efficiency frontiers; survey results; the Wharton approach; potential efficiency and comparative t...

The paper provides details of, and the background to, some of the results and policy implications of the ESRC/DTI survey into the extent and nature of management training. The main focus of the paper however concerns two statistical issues, the choice of sampling frames for U.K. companies and the low response rates that characterise business survey...

Changes in a nation's real income may differ from changes in domestic production due to gains (losses) arising from changes in the prices of exports relative to imports (terms of trade effect) and changes in net factor income and current transfers from abroad. Measures of these components in real terms are contingent on a particular utilization of...

Decisions regarding the amount and form of training are central to human resources management. Yet it is generally recognised that the acquisition of skills may also arise from on-the-job experience. There will be many cases where learning by experience will be the most important method of skill acquisition. Yet learning from experience may be thou...

This paper outlines a framework for productivity analysis which enables both partial and total input productivities to be identified in terms of money values and their real (volume) and unit value (terms-of-trade) components. Attention is given to the specification of the production relationship, index number issues and aggregation problems. The fr...

The concern of this chapter is with the estimation of the marginal productivity of hours worked for British manufacturing industries. Such estimates are of particular interest when considering the policy option of reducing average hours worked to increase employment (i.e., the number of employees). The approach taken is separately to specify the nu...

This paper is concerned with the meaning and measurement of potential productivity. Potential productivity is the difference between the actual and most efficient (optimal) productivity level. A number of concepts of potential productivity are outlined and their managerial implications discussed. Measures based on operating and lost time, peak outp...

Profit-maximizing price conditions are well established in economic theory. However, less attention has been directed to the effect on profits of deviations in price from the profit maximizing position. The conditions governing the emergence of a flat-maximum principle are established for both an absolute and relative concept of flatness.

The rationale for anti-inflationary policies (at least in the UK) arises from a theory that higher rates of inflation lead to a greater variability in the dispersion of prices and market distortions. This is because economic agents do not fully anticipate what future rates of inflation will be. Little or no empirical work has been directed to the a...

Attention is drawn to the limited conceptualisation of segment stability in static and comparative static segmentation frameworks. The use of parameter-variable models are briefly summarised to show how its conception may be developed and empirically integrated into a normative segmentation framework.