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A Comparison of Deflators for Telecommunications Services Output

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  • Mo Abdirahman
  • Diane Coyle
  • Richard Heys
  • Will Stewart

Abstract

[eng] Data usage in the UK expanded by nearly 2,300% between 2010 and 2017, yet real Gross Value Added for the telecommunications services industry fell by 8% between 2010 and 2016, while the industry experienced one of the slowest rates of recorded productivity growth. The disconnect between rapid technological improvements and the measured economic performance of the industry can largely be explained by the deflators applied to nominal output. We contrast two methodologically distinct options: the first consists in strengthening the existing Services Producer Price Index for Telecommunication Services, the second in measuring price changes through the average price per unit of data for various telecommunication services. The key distinction between these options can be considered as contrasting a revenue weighted index with one that can be seen as a volume weighted index. Using these methods, we conclude that telecommunications services prices fell by between 37% and 96% from 2010 to 2017, considerably more than the current deflator. The real output of the sector will therefore have been considerably higher than indicated by current statistics.

Suggested Citation

  • Mo Abdirahman & Diane Coyle & Richard Heys & Will Stewart, 2020. "A Comparison of Deflators for Telecommunications Services Output," Economie et Statistique / Economics and Statistics, Institut National de la Statistique et des Etudes Economiques (INSEE), issue 517-518-5, pages 103-122.
    • Handle: RePEc:nse:ecosta:ecostat_2020_517t_7
    DOI: https://doi.org/10.24187/ecostat.2020.517t.2017
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    References listed on IDEAS

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    Cited by:

    1. David M. Byrne, 2022. "The Digital Economy and Productivity," Finance and Economics Discussion Series 2022-038, Board of Governors of the Federal Reserve System (U.S.).
    2. Diane Coyle & Jen‐Chung Mei, 2023. "Diagnosing the UK productivity slowdown: which sectors matter and why?," Economica, London School of Economics and Political Science, vol. 90(359), pages 813-850, July.

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    More about this item

    JEL classification:

    • E01 - Macroeconomics and Monetary Economics - - General - - - Measurement and Data on National Income and Product Accounts and Wealth; Environmental Accounts
    • L16 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Industrial Organization and Macroeconomics; Macroeconomic Industrial Structure
    • L96 - Industrial Organization - - Industry Studies: Transportation and Utilities - - - Telecommunications

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