Price Measurements and Their Uses - National Bureau of Economic Research Studies in Income and Wealth Vol 57 (Hardback)

In an economy characterized by frequent change in technology, in the types of goods and services purchased, and in the forms of business organization, keeping track of price change continues to pose many difficulties. Price change affects the way we perceive changes in such basic measures as real output, productivity, and living standards. This volume, which brings together academic economists with those responsible for official price indexes, presents outstanding new research on price measurement. Half of the papers focus on prices for mainframe and personal computers, semiconductors, and other high-tech products, using mainly hedonic techniques. Some of the research in this volume suggests that prices for personal computers and semiconductors may have fallen even faster than the 14 percent annual rate of decrease indicated in the official statistics. Not all economists agree with the approach to computer price measurement taken by the government agencies, and the volume includes a panel discussion by distinguished economists about the theoretical and practical considerations of how best to measure price change of capital goods whose quality is changing rapidly. In the case of computers, these considerations have important implications for productivity measurement and profoundly affect our views of the relative importance of capital inputs and technological change in accounting for output growth. The authors also present new research on more conventional but still unsettled problems in the price field. Two papers deal with the consumer price index. One concerns the shift in market share away from small independents toward lower-price chains and supermarkets. The authors address whetherthe lower prices should be treated as a price reduction, or as no change, reflecting a shift to stores offering fewer services. The second paper looks at new approaches by the Bureau of Labor Statistics (BLS) to adjust for specification change in clothing. Two papers concern the