Consumers' Opinion of Inflation Bias Due to Quality Improvements

Jan Hanousek and Randall Filer

No 02/8, Economics Working Paper Archive at Hunter College from Hunter College Department of Economics

Abstract: Measurement of quality changes has proven to be an especially difficult aspect of calculating unbiased rates of inflation. We propose a new methodology of capturing quality improvements based on consumer focus groups and apply this methodology in an environment where quality changes might be expected to be especially rapid and extensive, a post-communist transition economy. We find that the methodology is practical and that it indicates a substantial understatement of quality improvements during transition, and, therefore, a substantial overstatement of inflation resulting in a serious downward bias in growth rate estimates for post-communist economies. The move to free markets has apparently improved consumers' welfare more by improving what they can purchase than by increasing how much they can purchase.

Keywords: Inflation Bias; Quality Change; Transition Economies (search for similar items in EconPapers)
JEL-codes: C82 E31 P24 (search for similar items in EconPapers)
Pages: 30 pp
Date: 2002
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (3)

Downloads: (external link)
http://econ.hunter.cuny.edu/wp-content/uploads/sit ... HunterEconWP02-8.pdf (application/pdf)

Related works:
Journal Article: Consumers' Opinion of Inflation Bias Due to Quality Improvements (2004)
Working Paper: Consumers' Opinion of Inflation Bias Due to Quality Improvements (2004)
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:htr:hcecon:02/8

Access Statistics for this paper

More papers in Economics Working Paper Archive at Hunter College from Hunter College Department of Economics 695 Park Avenue, New York, NY 10065. Contact information at EDIRC.
Bibliographic data for series maintained by Jonathan Conning ().