Product Turnover and the Cost-of-Living Index: Quality versus Fashion Effects

Kozo Ueda, Kota Watanabe and Tsutomu Watanabe

American Economic Journal: Macroeconomics, 2019, vol. 11, issue 2, 310-47

Abstract: This paper evaluates the effects of product turnover on a welfare-based cost-of-living index by incorporating the quality effect and the fashion effect. Employing scanner data for Japan for the years 1988–2013, we find that (i) the price and quantity of a new product tend to be higher than those of its predecessor at its exit; (ii) a considerable fashion effect exists for the entire sample period, while the quality effect is declining over time; and (iii) the discrepancy between the cost-of-living index estimated based on our methodology and the price index constructed only from a matched sample is not large.

JEL-codes: C43 E31 L11 L15 L81 (search for similar items in EconPapers)
Date: 2019
Note: DOI: 10.1257/mac.20160403
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Citations: View citations in EconPapers (14)

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