The Economic Theory of Price Indices

The Economic Theory of Price Indices
Author: Franklin M. Fisher
Publisher: Academic Press
Total Pages: 134
Release: 2014-05-10
Genre: Business & Economics
ISBN: 1483271153

The Economic Theory of Price Indices: Two Essays on the Effects of Taste, Quality, and Technological Change is concerned with the effects of consumer taste, product quality, and technological change on price indices. Special attention is paid on technological change in the simple two-sector production model of Rybczynski and Uzawa. The effects of the general case of changing factor supplies and factor-augmenting change on the real national output deflator are also examined. Comprised of two essays, this book begins with an analysis of the pure theory of the true cost-of-living index, which may be considered as an idealization of indices like the consumer price index and others of that type. The essay explores how the true cost-of-living index is affected by changes in consumer taste, quality changes in purchased goods, and the introduction of new goods into the market place. The second essay deals with the pure theory of the national output deflator and provides a foundation for the measurement of real national output (or product). It shows that the usual inequalities relating Paasche and Laspeyres to the true index are reversed (from what they are in cost-of-living theory) for the case of production. It also assesses the implications of changing production possibilities caused by technological change or a change in factor supplies. This monograph will be a useful resource for mathematicians, economists, and others interested in economic theory and mathematical economics.

A Practical Guide to Price Index and Hedonic Techniques

A Practical Guide to Price Index and Hedonic Techniques
Author: Ana M. Aizcorbe
Publisher: OUP Oxford
Total Pages: 133
Release: 2014-06-12
Genre: Business & Economics
ISBN: 0191006815

This book provides an accessible guide to price index and hedonic techniques, with a focus on how to best apply these techniques and interpret the resulting measures. One goal of this book is to provide first-hand experience at constructing these measures, with guidance on practical issues such as what the ideal data would look like and how best to construct these measures when the data are less than ideal. A related objective is to fill the wide gulf between the necessarily simplistic elementary treatments in textbooks and the very complex discussions found in the theoretical and empirical measurement literature. Here, the theoretical results are summarized in an intuitive way and their numerical importance is illustrated using data and results from existing studies. Finally, while the aim of much of the existing literature is to better understand official price indexes like the Consumer Price Index, the emphasis here is more practical: to provide the needed tools for individuals to apply these techniques on their own. As new datasets become increasingly accessible, tools like these will be needed to obtain summary price measures. Indeed, these techniques have been applied for years in antitrust cases that involve pricing, where economic experts typically have access to large, granular datasets.

Price Index Concepts and Measurement

Price Index Concepts and Measurement
Author: W. Erwin Diewert
Publisher: University of Chicago Press
Total Pages: 531
Release: 2010-02-15
Genre: Business & Economics
ISBN: 0226148572

Although inflation is much feared for its negative effects on the economy, how to measure it is a matter of considerable debate that has important implications for interest rates, monetary supply, and investment and spending decisions. Underlying many of these issues is the concept of the Cost-of-Living Index (COLI) and its controversial role as the methodological foundation for the Consumer Price Index (CPI). Price Index Concepts and Measurements brings together leading experts to address the many questions involved in conceptualizing and measuring inflation. They evaluate the accuracy of COLI, a Cost-of-Goods Index, and a variety of other methodological frameworks as the bases for consumer price construction.

Fifty Years of Economic Measurement

Fifty Years of Economic Measurement
Author: Ernst R. Berndt
Publisher: University of Chicago Press
Total Pages: 468
Release: 2008-04-15
Genre: Business & Economics
ISBN: 0226044319

This volume contains papers presented at a conference in May 1988 in Washington, D.C., commemorating the fiftieth anniversary of the founding of the Conference on Research in Income and Wealth (CRIW). The call for papers emphasized assessments of broad topics in economic measurement, both conceptual and pragmatic. The organizers desired (and succeeded in obtaining) a mix of papers that, first, illustrate the range of measurement issues that economics as a science must confront and, second, mark major milestones of CRIW accomplishment. The papers concern prices and output (Griliches, Pieper, Triplett) and also the major productive inputs, capital (Hulten) and labor (Hamermesh). Measures of saving, the source of capital accumulation, are covered in one paper (Boskin); measuring productivity, the source of much of the growth in per capita income, is reviewed in another (Jorgenson). The use of economic data in economic policy analysis and in regulation are illustrated in a review of measures of tax burden (Atrostic and Nunns) and in an analysis of the data needed for environmental regulation (Russell and Smith); the adequacy of data for policy analysis is evaluated in a roundtable discussion (chapter 12) involving four distinguished policy analysts with extensive government experience in Washington and Ottawa.

At What Price?

At What Price?
Author: National Research Council
Publisher: National Academies Press
Total Pages: 349
Release: 2002-03-25
Genre: Political Science
ISBN: 0309074428

How well does the consumer price index (CPI) reflect the changes that people actually face in living costsâ€"from apples to computers to health care? Given how it is used, is it desirable to construct the CPI as a cost-of-living index (COLI)? With what level of accuracy is it possible to construct a single index that represents changes in the living costs of the nation's diverse population? At What Price? examines the foundations for consumer price indexes, comparing the conceptual and practical strengths, weaknesses, and limitations of traditional "fixed basket" and COLI approaches. The book delves into a range of complex issues, from how to deal with the changing quality of goods and services, including difficult-to-define medical services, to how to weight the expenditure patterns of different consumers. It sorts through the key attributes and underlying assumptions that define each index type in order to answer the question: Should a COLI framework be used in constructing the U.S. CPI? In answering this question, the book makes recommendations as to how the Bureau of Labor Statistics can continue to improve the accuracy and relevance of the CPI. With conclusions that could affect the amount of your next pay raise, At What Price? is important to everyone, and a must-read for policy makers, researchers, and employers.

Error in Economics

Error in Economics
Author: Julian Reiss
Publisher: Routledge
Total Pages: 272
Release: 2016-02-04
Genre: Business & Economics
ISBN: 1317496825

What is the correct concept behind measures of inflation? Does money cause business activity or is it the other way around? Shall we stimulate growth by raising aggregate demand or rather by lowering taxes and thereby providing incentives to produce? Policy-relevant questions such as these are of immediate and obvious importance to the welfare of societies. The standard approach in dealing with them is to build a model, based on economic theory, answer the question for the model world and then apply the results to economic phenomena outside. Data come in, if at all, only in testing a limited number of the model's consequences. Despite some critical voices, economic methodology too has by and large subscribed to a "theory first" approach to applied economics. Error in Economics systematically develops an alternative to the theory-based orthodoxy. It places the methodical study of evidence at the centre of the scientific enterprise and thus provides a foundation for a methodology of evidence-based economics. But the book does not stop at the truism that claims should be based on the best available evidence. Rather, detailed studies in the areas of measurement, causal inference and policy analysis show what it means for a claim to be evidence-based in the context of a concrete case. The examples discussed concern topics as diverse as consumer price indices, radio spectrum auctions, the transmission mechanism, natural experiments on minimum wages and the evaluation of counterfactuals for policy. Error in Economics is essential reading for economic methodologists, philosophers of science and anyone interested in how claims about socio-economic matters are validated.

Economic Analysis of Product Innovation

Economic Analysis of Product Innovation
Author: Manuel Trajtenberg
Publisher: Harvard University Press
Total Pages: 260
Release: 1990
Genre: Business & Economics
ISBN: 9780674225404

One of the most striking features of contemporary industrial economies is their ability to offer an ever-expanding and improving range of products. Personal computers, tiny pacemakers, digital watches, and VCRs simply did not exist, and were not even dreamt of, only a few decades ago. Such product innovations play an increasingly important role in modern economic growth, and it is therefore imperative that economists come to grips with them, just as they have done with traditional economic phenomena. In this skillfully crafted and imaginative study, Manuel Trajtenberg develops the tools to quantify and analyze the notion of product innovation. He argues persuasively that the magnitude of an innovation should be equated with the social benefits that it generates. Drawing from the "characteristics approach" to demand theory and the econometrics of discrete choice, he presents an ingenious method to estimate the benefits from product innovations that accrue to the consumer over time. His method centers on consumer preferences for different product attributes -such as speed and size of memory in computers-and then uses those preferences to evaluate the changes in attributes. Trajtenberg applies his approach to the study of one of the most remarkable innovations in medical technology--Computed Tomography (CT) scanners. He assembled for that purpose an impressive set of data on every aspect of the new technology, from qualities and prices, patents and research, to details on virtually every sale in the United States during the decade following the introduction of CT in 1973. This close-up view of an innovation, quite rare in economic literature, offers valuable insights on the nature of the innovative process, the interaction between innovation and diffusion, the effects of uncertainty about quality, and the implications of changing preferences.