Errors in Output Deflators Revisited: Unit Values and the PPI
Extending a methodology developed by Lichtenberg and Griliches (1989), we examine the extent of measurement error in two independent indicators of price change: the producer price index (PPI) and the U.S. Census Bureau's unit value relative (UVR). Estimation of factor analytic models is improved by the availability of more accurate and comprehensive proxies for price and quality change within industries and a more complete specification of the econometric model. We find that the UVR is a "noisier measure of price change than the PPI and that the PPI adjusts for approximately 57% of product quality change.
|Date of creation:||Dec 1991|
|Publication status:||published as EI, Vol. 32, no. 1 (1994): 11-32.|
|Contact details of provider:|| Postal: National Bureau of Economic Research, 1050 Massachusetts Avenue Cambridge, MA 02138, U.S.A.|
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- Zvi Griliches, 1991.
"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, pages 185-206
National Bureau of Economic Research, Inc.
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