Do hedonic price indexes change history? The case of 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 earlier 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, current prices for electric motors decreased by 13.2 and 12.2 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 in 1920–29. In contrast to Sweden, the US annual total factor productivity growth was only, according to current best estimates, 3.5 percent in Electric machinery compared to 5.3 percent in manufacturing in 1920–29. However, hedonic price indexes were not used to calculate US productivity. Finally, it is shown that the price decreases for electric motors in the 1920s were not on par with the price decreases for ICT-equipment in the 1990s, even if hedonic indexing is used in both cases.
|Date of creation:||16 Feb 2005|
|Date of revision:||28 Feb 2005|
|Contact details of provider:|| Postal: The Economic Research Institute, Stockholm School of Economics, P.O. Box 6501, 113 83 Stockholm, Sweden|
Phone: +46-(0)8-736 90 00
Fax: +46-(0)8-31 01 57
Web page: http://www.hhs.se/
More information through EDIRC
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.:
- 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.
- Gordon, Robert J, 2000.
"Does the 'New Economy' Measure up to the Great Inventions of the Past?,"
CEPR Discussion Papers
2607, C.E.P.R. Discussion Papers.
- Robert J. Gordon, 2000. "Does the "New Economy" Measure Up to the Great Inventions of the Past?," Journal of Economic Perspectives, American Economic Association, vol. 14(4), pages 49-74, Fall.
- Robert J. Gordon, 2000. "Does the "New Economy" Measure up to the Great Inventions of the Past?," NBER Working Papers 7833, National Bureau of Economic Research, Inc.
- Nicholas Crafts, 2004.
"Steam as a general purpose technology: A growth accounting perspective,"
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.
- Jovanovic, Boyan & Rousseau, Peter L., 2005.
"General Purpose Technologies,"
Handbook of Economic Growth,
in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 1, chapter 18, pages 1181-1224
- Trajtenberg, M. & Bresnahan, T.F., 1992.
"General Purpose Technologies: "Engines of Growth","
16-92, Tel Aviv.
- Stefano Scarpetta & Andrea Bassanini & Dirk Pilat & Paul Schreyer, 2000. "Economic Growth in the OECD Area: Recent Trends at the Aggregate and Sectoral Level," OECD Economics Department Working Papers 248, OECD Publishing.
- Nicholas Crafts, 2002.
"Productivity growth in the Industrial Revolution: a new growth accounting perspective,"
Federal Reserve Bank of San Francisco, issue Nov.
- Crafts, Nicholas, 2004. "Productivity Growth in the Industrial Revolution: A New Growth Accounting Perspective," The Journal of Economic History, Cambridge University Press, vol. 64(02), pages 521-535, June.
- 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.
- Frederick V. Waugh, 1928. "Quality Factors Influencing Vegetable Prices," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 10(2), pages 185-196.
- Raff, D.M.G. & Trajtenberg, M., 1995.
"Quality Adjusted Prices for the American Automobile Industry: 1906-1940,"
10-95, Tel Aviv.
- Daniel M. G. Raff & Manuel Trajtenberg, 1996. "Quality-Adjusted Prices for the American Automobile Industry: 1906-1940," NBER Chapters, in: The Economics of New Goods, pages 71-108 National Bureau of Economic Research, Inc.
- Daniel M.G. Raff & Manuel Trajtenberg, 1995. "Quality-Adjusted Prices for the American Automobile Industry: 1906-1940," NBER Working Papers 5035, National Bureau of Economic Research, Inc.
- Henrekson, Magnus & Edquist, Harald, 2006.
"Technological Breakthroughs and Productivity Growth,"
Working Paper Series
665, Research Institute of Industrial 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.
- repec:ucp:bknber:9780226304557 is not listed on IDEAS
- 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..
- 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.
When requesting a correction, please mention this item's handle: RePEc:hhs:hastef:0586. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Helena Lundin)
If references are entirely missing, you can add them using this form.