 Missing Growth from Creative DestructionPhilippe Aghion, Antonin Bergeaud, Timo Boppart, Pete Klenow and Huiyu Li No 2017-4, Working Paper Series from Federal Reserve Bank of San Francisco Abstract: Statistical agencies typically impute inflation for disappearing products from the inflation rate for surviving products. As some products disappear precisely because they are displaced by better products, inflation may be lower at these points than for surviving products. As a result, creative destruction may result in overstated inflation and understated growth. We use a simple model to relate this ?missing growth? to the frequency and size of various kinds of innovations. Using U.S. Census data, we then apply two ways of assessing the magnitude of missing growth for all private nonfarm businesses for 1983?2013. The first approach exploits information on the market share of surviving plants. The second approach applies indirect inference to firm-level data. We find: (i) missing growth from imputation is substantial?0.5 percentage points per year when using the first approach, 1 percentage point per year using the second method; and (ii) almost all of the missing growth is due to creative destruction (as opposed to new varieties). Pages: 41 pages Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:fip:fedfwp:2017-04 Ordering information: This working paper can be ordered from DOI: 10.24148/wp2017-04 Access Statistics for this paper More papers in Working Paper Series from Federal Reserve Bank of San Francisco Contact information at EDIRC. |
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