The Centre for European Economic Research (ZEW) is undertaking a study for the Statistical Office Germany in order to discern the possibilities of applying hedonic techniques to quantify quality changes in official customer price statistics. The study is based on the conviction that the impact of quality changes on prices is a central problem during the compilation of price indices. In addition to traditional methods, the OECD states increasingly make use of hedonic techniques in order to control for quality changes. The application of hedonic price indices also in Germany is supposed to ensure the possibility of comparison on an international level. At the same time, a high degree of continuity towards past efforts must be attained, so that the current excellent quality of official price statistics can be preserved.Therefore the ZEW will develop hedonic price indices for a selected group of goods. In cooperation with the Statistical Office Germany we will also collect suggestions for the application of the new findings in other areas of the practice of official consumer price statistics.The project encompasses three steps. First the present state of empirical and theoretical research will be presented. In addition, we will give a current overview over the application of hedonic techniques in the practice of official statistics in the OECD states. In the second step, we will apply hedonic methods to two selected groups of goods, personal computers and automobiles, and test them for their statistical robustness. Furthermore, quantitative statements concerning the size of the quality bias for these goods in Germany will be developed. During the third step, we will examine whether our findings can be generalised for other goods, and how, respectively under which conditions, this method can be introduced into the statistical practice in Germany. Each step will be documented in detailed intermediate and final reports. These will include the results on the one hand, but also a thorough and comprehensible description of the methods and processes that we used.

Selected Publications