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Hedonic Price Indexes and the Measurement of Capital and Productivity: Some Historical Reflections

In: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth

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  • Zvi Griliches

Abstract

The paper describes the background for my original "hedonics" paper (Griliches 1961) and discusses some of the issues raised by the subsequent literature on this range of topics. It goes on to consider some of the implications of this work for the measurement of capital services and connects it to the Jorgenson-Griliches (1967) paper on the "explanation of productivity change." It reviews the criticisms made against that paper, especially the use of a utilization adjustment, and fin& itself, perhaps unsurprisingly, still in sympathy with its major thrust. It also cautions against interpreting the recent slowdown in the growth of total factor productivity as implying, necessarily, a parallel slowdown in the technological potential of the economy.
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  • Zvi Griliches, 1991. "Hedonic Price Indexes and the Measurement of Capital and Productivity: Some Historical Reflections," NBER Chapters,in: Fifty Years of Economic Measurement: The Jubilee of the Conference on Research in Income and Wealth, pages 185-206 National Bureau of Economic Research, Inc.
  • Handle: RePEc:nbr:nberch:5976
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    References listed on IDEAS

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    1. Makoto Ohta & Zvi Griliches, 1976. "Automobile Prices Revisited: Extensions of the Hedonic Hypothesis," NBER Chapters,in: Household Production and Consumption, pages 325-398 National Bureau of Economic Research, Inc.
    2. D. W. Jorgenson & Z. Griliches, 1967. "The Explanation of Productivity Change," Review of Economic Studies, Oxford University Press, vol. 34(3), pages 249-283.
    3. Irving B. Kravis & Robert E. Lipsey, 1971. "Price Competitiveness in World Trade," NBER Books, National Bureau of Economic Research, Inc, number krav71-1.
    4. Zvi Griliches, 1964. "Notes on the Measurement of Price and Quality Changes," NBER Chapters,in: Models of Income Determination, pages 381-418 National Bureau of Economic Research, Inc.
    5. Ariél Pakes & Zvi Griliches, 1984. "Estimating Distributed Lags in Short Panels with an Application to the Specification of Depreciation Patterns and Capital Stock Constructs," Review of Economic Studies, Oxford University Press, vol. 51(2), pages 243-262.
    6. Muellbauer, John, 1974. "Household Production Theory, Quality, and the "Hedonic Technique."," American Economic Review, American Economic Association, pages 977-994.
    7. Epple, Dennis, 1987. "Hedonic Prices and Implicit Markets: Estimating Demand and Supply Functions for Differentiated Products," Journal of Political Economy, University of Chicago Press, vol. 95(1), pages 59-80, February.
    8. Catherine J. Morrison, 1985. "On the Economic Interpretation and Measurement of Optimal Capacity Utilization with Anticipatory Expectations," Review of Economic Studies, Oxford University Press, vol. 52(2), pages 295-309.
    9. Lucas, Robert E B, 1975. "Hedonic Price Functions," Economic Inquiry, Western Economic Association International, vol. 13(2), pages 157-178, June.
    10. Robert J. Gordon, 1982. "Energy Efficiency, User-Cost Change, and the Measurement of Durable Goods Prices," NBER Chapters,in: The U.S. National Income and Product Accounts: Selected Topics, pages 205-268 National Bureau of Economic Research, Inc.
    11. Daniel McFadden, 1977. "Modelling the Choice of Residential Location," Cowles Foundation Discussion Papers 477, Cowles Foundation for Research in Economics, Yale University.
    12. Berndt, Ernst R. & Fuss, Melvyn A., 1986. "Productivity measurement with adjustments for variations in capacity utilization and other forms of temporary equilibrium," Journal of Econometrics, Elsevier, pages 7-29.
    13. Timothy J. Bartik & V. Kerry Smith, 1996. "Urban Amenities and Public Policy," Book chapters authored by Upjohn Institute researchers,in: V. Kerry Smith (ed.), Estimating Economic Values for Nature: Methods for Non-Market Valuation, pages 271-318 W.E. Upjohn Institute for Employment Research.
    14. 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..
    15. Kelvin J. Lancaster, 1966. "A New Approach to Consumer Theory," Journal of Political Economy, University of Chicago Press, vol. 74, pages 132-132.
    16. James A. Kahn, 1986. "Gasoline Prices and the Used Automobile Market: A Rational Expectations Asset Price Approach," The Quarterly Journal of Economics, Oxford University Press, vol. 101(2), pages 323-339.
    17. Robert E. Hall, 1986. "Market Structure and Macroeconomic Fluctuations," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, pages 285-338.
    18. Miller, Edward M, 1983. "Capital Aggregation in the Presence of Obsolescence-Inducing Technical Change," Review of Income and Wealth, International Association for Research in Income and Wealth, vol. 29(3), pages 283-296, September.
    19. Griliches, Zvi, 1977. "Estimating the Returns to Schooling: Some Econometric Problems," Econometrica, Econometric Society, vol. 45(1), pages 1-22, January.
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    Cited by:

    1. Feenstra, Robert C, 1995. "Exact Hedonic Price Indexes," The Review of Economics and Statistics, MIT Press, pages 634-653.
    2. Maryellen R. Kelley & Cynthia R. Cook, 1998. "The Institutional Context and Manufacturing Performance: The Case of the U.S. Defense Industrial Network," NBER Working Papers 6460, National Bureau of Economic Research, Inc.
    3. Juan A. Cañada Vicinay, 1997. "Les équations hédoniques de salaire et la perception subjective des conditions de travail," Économie et Prévision, Programme National Persée, vol. 131(5), pages 155-174.
    4. Donald Siegel, 1991. "Errors in Output Deflators Revisited: Unit Values and the PPI," NBER Working Papers 3935, National Bureau of Economic Research, Inc.
    5. Finn R. Førsund & Roberto Zanola, 2001. "Selling Picasso paintings: the efficiency of auction houses," ICER Working Papers 07-2001, ICER - International Centre for Economic Research.
    6. Christos Ioannidis & Mick Silver, 2003. "Chained, exact and superlative hedonic price changes: estimates from microdata," Applied Economics, Taylor & Francis Journals, vol. 35(9), pages 1005-1014.
    7. Bussiere, Matthieu & Fratzscher, Marcel, 2006. "Towards a new early warning system of financial crises," Journal of International Money and Finance, Elsevier, pages 953-973.
    8. Silver, Mick & Heravi, Saeed, 2005. "A Failure in the Measurement of Inflation: Results From a Hedonic and Matched Experiment Using Scanner Data," Journal of Business & Economic Statistics, American Statistical Association, vol. 23, pages 269-281, July.
    9. Robert C. Feenstra, 1993. "Measuring the Welfare Effect of Quality Change: Theory and Application of Japanese Autos," NBER Working Papers 4401, National Bureau of Economic Research, Inc.
    10. J. Beaulieu & Joe Mattey, 1998. "The Workweek of Capital and Capital Utilization in Manufacturing," Journal of Productivity Analysis, Springer, pages 199-223.

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