Effects of New Goods and Product Turnover on Price Indexes

Naohito Abe, Toshiki Enda, Noriko Inakura and Akiyuki Tonogi

No DP15-2, RCESR Discussion Paper Series from Research Center for Economic and Social Risks, Institute of Economic Research, Hitotsubashi University

Abstract: This study analyzes the importance of new products for price measurements. Using large-scale retail scanner data in Japan, we construct a unit value price index and decompose its fluctuation into (1) standard price change effects, (2) substitution effects within continuing goods, and (3) turnover-new product effects. The aggregate unit price index exhibits different movements from the standard Laspeyres price index. After the 2014 change in Japan's tax rate, turnover-new product effects from the appearance of relatively expensive new goods increased by 1 percentage point, contributing to increases in unit value. However, the standard Laspeyres price index, which excludes information for new or disappearing goods, exhibited no large changes before and after the tax revision.

Pages: 25 pages
Date: 2015-03
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Citations: View citations in EconPapers (4)

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