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Minding Your Ps and Qs: Going from Micro to Macro in Measuring Prices and Quantities

Author

Listed:
  • Gabriel Ehrlich
  • John C. Haltiwanger
  • Ron S. Jarmin
  • David Johnson
  • Matthew D. Shapiro

Abstract

Key macro indicators such as output, productivity, and inflation are based on a complex system across multiple statistical agencies using different samples and different levels of aggregation. The Census Bureau collects nominal sales, the Bureau of Labor Statistics collects prices, and the Bureau of Economic Analysis constructs nominal and real GDP using these data and other sources. The price and quantity data are integrated at a high level of aggregation. This paper explores alternative methods for re-engineering key national output and price indices using item-level data. Such re-engineering offers the promise of greatly improved key economic indicators along many dimensions.

Suggested Citation

  • Gabriel Ehrlich & John C. Haltiwanger & Ron S. Jarmin & David Johnson & Matthew D. Shapiro, 2019. "Minding Your Ps and Qs: Going from Micro to Macro in Measuring Prices and Quantities," NBER Working Papers 25465, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:25465
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    References listed on IDEAS

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    1. Gabriel Ehrlich & John C. Haltiwanger & Ron S. Jarmin & David Johnson & Matthew D. Shapiro, 2020. "Reengineering Key National Economic Indicators," NBER Chapters, in: Big Data for Twenty-First-Century Economic Statistics, pages 25-68, National Bureau of Economic Research, Inc.
    2. Feenstra, Robert C, 1994. "New Product Varieties and the Measurement of International Prices," American Economic Review, American Economic Association, vol. 84(1), pages 157-177, March.
    3. Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
    4. C. Lanier Benkard & Patrick Bajari, 2005. "Hedonic Price Indexes With Unobserved Product Characteristics, and Application to Personal Computers," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 61-75, January.
    5. Colin J. Hottman & Stephen J. Redding & David E. Weinstein, 2016. "Quantifying the Sources of Firm Heterogeneity," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 131(3), pages 1291-1364.
    6. Ron S. Jarmin, 2019. "Evolving Measurement for an Evolving Economy: Thoughts on 21st Century US Economic Statistics," Journal of Economic Perspectives, American Economic Association, vol. 33(1), pages 165-184, Winter.
    7. Matthew D. Shapiro & David W. Wilcox, 1996. "Mismeasurement in the Consumer Price Index: An Evaluation," NBER Chapters, in: NBER Macroeconomics Annual 1996, Volume 11, pages 93-154, National Bureau of Economic Research, Inc.
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    Cited by:

    1. Gabriel Ehrlich & John C. Haltiwanger & Ron S. Jarmin & David Johnson & Matthew D. Shapiro, 2020. "Reengineering Key National Economic Indicators," NBER Chapters, in: Big Data for Twenty-First-Century Economic Statistics, pages 25-68, National Bureau of Economic Research, Inc.
    2. Patterson, David, 2021. "The Money Value Problem: Convertibility & Stable Prices Revisited," Studies in Applied Economics 177, The Johns Hopkins Institute for Applied Economics, Global Health, and the Study of Business Enterprise.

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    More about this item

    JEL classification:

    • D12 - Microeconomics - - Household Behavior - - - Consumer Economics: Empirical Analysis
    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

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