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

Research output: Contribution to journalArticle

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 1 1994
Externally publishedYes

ASJC Scopus subject areas

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

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