Does hedonic price indexing change our interpretation of economic history? Evidence from Swedish electrification
Rapid price decreases for ICT-products in the 1990s have been largely attributed to the introduction of hedonic price indexes. Would hedonic price indexing also have large effects on measured price and productivity during other technological breakthroughs? This paper investigates the impact of hedonic and matched model methods on historical data for electric motors in Sweden 1900–35. The results show that during the productivity boom of the 1920s, the constant prices for electric motors decreased by 9.7 and 8.1 percent per year depending on whether hedonic or matched model price indexes were used. This indicates high productivity growth in the industry producing electric motors 1920–29. In contrast to Sweden, the US annual total factor productivity was only, according to current best estimates, 3.5 percent in Electric machinery compared to 5.3 percent in manufacturing 1920–29. However, hedonic price indexes were not used to calculate US productivity. Moreover, in comparison to the matched model, the hedonic price index on average overestimates price decreases when prices are decreasing and overestimates price increases when prices are increasing. However, the total effect of the two different price indexes remains approximately the same in 1900–35. Finally, it is shown that the price decreases for electric motors in the 1920s are not in par with the price decreases for ICT-equipment in the 1990s, even if hedonic indexing is used.
(This abstract was borrowed from another version of this item.)
If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
As the access to this document is restricted, you may want to look for a different version under "Related research" (further below) or search for a different version of it.
Volume (Year): 63 (2010)
Issue (Month): 2 (05)
|Contact details of provider:|| Web page: http://www.blackwellpublishing.com/journal.asp?ref=0013-0117|
More information through EDIRC
|Order Information:||Web: http://www.blackwellpublishing.com/subs.asp?ref=0013-0117|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Bresnahan, Timothy F. & Trajtenberg, M., 1995.
"General purpose technologies 'Engines of growth'?,"
Journal of Econometrics,
Elsevier, vol. 65(1), pages 83-108, January.
- Timothy F. Bresnahan & Manuel Trajtenberg, 1992. "General Purpose Technologies "Engines of Growth?"," NBER Working Papers 4148, National Bureau of Economic Research, Inc.
- Trajtenberg, M. & Bresnahan, T.F., 1992. "General Purpose Technologies: "Engines of Growth"," Papers 16-92, Tel Aviv.
- David, Paul A, 1990. "The Dynamo and the Computer: An Historical Perspective on the Modern Productivity Paradox," American Economic Review, American Economic Association, vol. 80(2), pages 355-361, May.
- Edquist, Harald, 2005. "The Swedish ICT miracle -- myth or reality?," Information Economics and Policy, Elsevier, vol. 17(3), pages 275-301, July.
- Edquist, Harald, 2004. "The Swedish ICT miracle: myth or reality?," GGDC Research Memorandum 200472, Groningen Growth and Development Centre, University of Groningen.
- Edquist, Harald, 2004. "The Swedish ICT Miracle - Myth or Reality," SSE/EFI Working Paper Series in Economics and Finance 556, Stockholm School of Economics, revised 29 Mar 2004.
- Ernst R. Berndt & Neal J. Rappaport, 2001. "Price and Quality of Desktop and Mobile Personal Computers: A Quarter-Century Historical Overview," American Economic Review, American Economic Association, vol. 91(2), pages 268-273, May.
- Devine, Warren D., 1983. "From Shafts to Wires: Historical Perspective on Electrification," The Journal of Economic History, Cambridge University Press, vol. 43(02), pages 347-372, June.
- Nicholas Crafts, 2004. "Steam as a general purpose technology: A growth accounting perspective," Economic Journal, Royal Economic Society, vol. 114(495), pages 338-351, 04.
- Nicholas Crafts, 2003. "Steam as a general purpose technology: a growth accounting perspective," Economic History Working Papers 22354, London School of Economics and Political Science, Department of Economic History.
- Rosen, Sherwin, 1974. "Hedonic Prices and Implicit Markets: Product Differentiation in Pure Competition," Journal of Political Economy, University of Chicago Press, vol. 82(1), pages 34-55, Jan.-Feb..
- Jack Triplett, 2004. "Handbook on Hedonic Indexes and Quality Adjustments in Price Indexes: Special Application to Information Technology Products," OECD Science, Technology and Industry Working Papers 2004/9, OECD Publishing.
- David, P.A., 1989. "Computer And Dynamo: The Modern Productivity Paradox In A Not-Too Distant Mirror," The Warwick Economics Research Paper Series (TWERPS) 339, University of Warwick, Department of Economics.
- Edquist, Harald & Henrekson, Magnus, 2004. "Technological Breakthroughs and Productivity Growth," SSE/EFI Working Paper Series in Economics and Finance 0562, Stockholm School of Economics, revised 04 Apr 2005.
- Henrekson, Magnus & Edquist, Harald, 2006. "Technological Breakthroughs and Productivity Growth," Working Paper Series 665, Research Institute of Industrial Economics.