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CPI Quality Adjustment and Productivity Growth: Railway Services in Japan

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  • Kiyohito Utsunomiya

Abstract

In recent years quality adjustment of price indices has been vigorously explored and the hedonic regression method has become popular in official statistics. In service sectors, however, the current CPI seems not to have been successfully adjusted to accommodate quality changes. In this paper I focus on the railway industry in Japan, where quality change is a vital factor in the measurement of price indices and productivity. Using hedonic regressions to adjust CPI railway fares, the paper suggests that there may be a significant degree of upward bias in the current CPI railway fares. Also, this leads to the results that the total factor productivity (TFP) of the Japanese railway industry, which is calculated by using the newly adjusted CPI as a deflator, has been improved contrary to previous research on this issue.

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  • Kiyohito Utsunomiya, 2004. "CPI Quality Adjustment and Productivity Growth: Railway Services in Japan," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 50(3), pages 411-429, September.
    • Handle: RePEc:bla:revinw:v:50:y:2004:i:3:p:411-429
    DOI: 10.1111/j.0034-6586.2004.00132.x
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    Cited by:

    1. Kazuhiko Nishimura & Satoshi Nakano, 2011. "Measuring innovations in the Japanese LCD TVs using market data," Applied Economics Letters, Taylor & Francis Journals, vol. 18(10), pages 989-995.
    2. Satoshi Nakano & Kazuhiko Nishimura, 2013. "Welfare gain from quality and price development in the Japan’s LCD TV market," Journal of Evolutionary Economics, Springer, vol. 23(4), pages 889-908, September.

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