Lower import prices = 100% welfare gains? Not necessarily: don′t forget the impact of consumer taste and product quality

Konstantins Benkovskis, Julia Woerz 15 July 2014

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Official price statistics, which mostly reflect price surveys of importers, rely on the so-called overlap method to adjust price observations for changing product baskets. The implicit assumption is that price differences between old and new products entirely reflect differences in quality. Many problems remain: officially reported import prices, even when adjusted for quality, measure changes in the price for one unit of a product, while welfare analysis looks into the price per unit of unobserved utility.

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Topics:  International trade

Tags:  welfare gains, product quality, consumer tastes, gains from trade, hedonic price index, import prices, varieties

Why GDP just doesn’t add up

Diane Coyle interviewed by Viv Davies,

Date Published

Mon, 06/09/2014

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Topics

Frontiers of economic research
Tags
happiness, GDP measurement, hedonic price index

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Measuring economic progress A new measure of US GDP
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Measuring economic progress

Diane Coyle 17 February 2014

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The debate about how best to measure economic activity dates back to well before the ‘invention’ of GDP by Richard Stone and others during the Second World War (Stone 1947). The earliest attempt was William Petty’s 1665 estimate of income and expenditure in England and Wales, followed by a variety of other approaches in the 18th and 19th centuries. By the 1930s, partly in response to the demand from policymakers for a better handle on what was happening in the economy, the current approach to national income was taking shape (Coyle 2014).

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Topics:  Frontiers of economic research

Tags:  happiness, GDP measurement, hedonic price index

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