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Missing growth measurement in Germany

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Listed:
  • Schmidt, Vanessa
  • Schreiber, Sven

Abstract

Using detailed establishment-level micro data, this paper analyzes the quantitative implications of the missing-growth hypothesis by Aghion, Bergeaud, Boppart, Klenow, and Li (2019) for Germany. This hypothesis states that actual growth rates of real output are systematically understated by official estimates, such that a part of real growth is missing in the published data. The underlying effect rests on overstated inflation estimates due to imputed prices for disappearing goods and services varieties, which is indirectly measured by plant entry and exit dynamics. Using different market share proxies our main results regarding understated real output growth lie in the range of 0:39 to 0:54 percentage points per year on average for the benchmark sample 1998-2016. These are quite closely in line with existing findings for France, the USA, and Japan (in different periods). We provide additional robustness analysis and discuss limitations of the approach.

Suggested Citation

  • Schmidt, Vanessa & Schreiber, Sven, 2020. "Missing growth measurement in Germany," VfS Annual Conference 2020 (Virtual Conference): Gender Economics 224616, Verein für Socialpolitik / German Economic Association.
    • Handle: RePEc:zbw:vfsc20:224616
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    References listed on IDEAS

    as
    1. Philippe Aghion & Antonin Bergeaud & Timo Boppart & Simon Bunel, 2018. "Firm Dynamics and Growth Measurement in France," Journal of the European Economic Association, European Economic Association, vol. 16(4), pages 933-956.
    2. Elstner, Steffen & Feld, Lars P. & Schmidt, Christoph M., 2018. "The German productivity paradox: Facts and explanations," Ruhr Economic Papers 767, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    3. Rebekka Christopoulou & Philip Vermeulen, 2012. "Markups in the Euro area and the US over the period 1981–2004: a comparison of 50 sectors," Empirical Economics, Springer, vol. 42(1), pages 53-77, February.
    4. Anttila, Juho, 2018. "Missing Growth in Finland," ETLA Working Papers 60, The Research Institute of the Finnish Economy.
    5. Eeckhout, Jan & De loecker, Jan, 2018. "Global Market Power," CEPR Discussion Papers 13009, C.E.P.R. Discussion Papers.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    creative destruction; price imputation; inflation measurement;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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