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A Comparison of Deflators for Telecommunications Services Output

Mo Abdirahman, Diane Coyle (), Richard Heys and Will Stewart

Economie et Statistique / Economics and Statistics, 2020, issue 517-518-519, 103-122

Abstract: [eng] Data usage in the UK expanded by nearly 2,300% between 2010 and 2017, yet real Gross Value Added for the telecommunications services industry fell by 8% between 2010 and 2016, while the industry experienced one of the slowest rates of recorded productivity growth. The disconnect between rapid technological improvements and the measured economic performance of the industry can largely be explained by the deflators applied to nominal output. We contrast two methodologically distinct options: the first consists in strengthening the existing Services Producer Price Index for Telecommunication Services, the second in measuring price changes through the average price per unit of data for various telecommunication services. The key distinction between these options can be considered as contrasting a revenue weighted index with one that can be seen as a volume weighted index. Using these methods, we conclude that telecommunications services prices fell by between 37% and 96% from 2010 to 2017, considerably more than the current deflator. The real output of the sector will therefore have been considerably higher than indicated by current statistics.

JEL-codes: E01 L16 L96 (search for similar items in EconPapers)
Date: 2020
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DOI: 10.24187/ecostat.2020.517t.2017

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