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When Do Chained Deflators for IT Goods Overstate Quality Change?

Author

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  • Ana Aizcorbe
  • Daniel Ripperger-Suhler

Abstract

In general, chained deflators for IT goods will have a commingling problem that causes them to overstate quality growth. We base this on a comparison of chained superlative indexes with a multilateral index that does not have the commingling problem—the weighted time product dummy index. Empirical results from three recent studies suggest that this can occur often—we saw this in 9 of the 12 categories studied—and that the gaps can be nontrivial. We argue that the recently developed multilateral methods may be a better strategy in price measurement for this sector.

Suggested Citation

  • Ana Aizcorbe & Daniel Ripperger-Suhler, 2026. "When Do Chained Deflators for IT Goods Overstate Quality Change?," AEA Papers and Proceedings, American Economic Association, vol. 116, pages 556-561, May.
    • Handle: RePEc:aea:apandp:v:116:y:2026:p:556-561
    DOI: 10.1257/pandp.20261061
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    More about this item

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • L13 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Oligopoly and Other Imperfect Markets
    • L63 - Industrial Organization - - Industry Studies: Manufacturing - - - Microelectronics; Computers; Communications Equipment

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