ERRORS IN OUTPUT DEFLATORS REVISITED: UNIT VALUES AND THE PRODUCER PRICE INDEX

Research output: Contribution to journalArticlepeer-review

23 Scopus citations

Abstract

Output prices are mismeasured because of inadequate adjustments for changes in product quality. Thus, when quality improves, inflation will be systematically over‐stated. In this study, I find that the most commonly used indicator of the rate of inflation, the Producer Price Index, misses about 40 percent of the change in quality. However, I also find that the mismeasurement of output prices is constant over time, implying that errors of measurement are not a significant determinant of either the slowdown or recent acceleration in manufacturing productivity.

Original languageEnglish (US)
Pages (from-to)11-32
Number of pages22
JournalEconomic Inquiry
Volume32
Issue number1
DOIs
StatePublished - Jan 1994
Externally publishedYes

ASJC Scopus subject areas

  • Business, Management and Accounting(all)
  • Economics and Econometrics

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