Nguyen, Thang (2005): Separating Quantity Shock and Quality Innovation in Relative Prices.
Download (289kB) | Preview
The study develops a simple general equilibrium model to infer relative quality changes, and applies the method to the US services goods economy in 1946-2005. The general equilibrium framework helps separate quantity and quality e¤ects on the observable relative price and budget share which constitute double manifestation. Empirical results show that US services relative quality is increasing since 1970s, and quantity shock alone cannot fully explain the evolution of services relative price. The latter finding puts forth a warning on the missing of quality changes in some business cycle models.
|Item Type:||MPRA Paper|
|Original Title:||Separating Quantity Shock and Quality Innovation in Relative Prices|
|Keywords:||quality innovation; quality inference; business cycles|
|Subjects:||E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation
E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E32 - Business Fluctuations ; Cycles
|Depositing User:||Thang Nguyen|
|Date Deposited:||08. Oct 2006|
|Last Modified:||12. Feb 2013 13:59|
 Arrow, K. J., H. B. Chenery, B. S. Minhas, and R. M. Solow (1961). "Capital-Labor Substitution and Economic Efficiency," Review of Economics and Statistics, Vol. 43, No. 3, 225-250.
 Bils, Mark, and Peter J. Klenow (2001). "Quantifying Quality Growth," American Economic Review, Vol. 91, No. 4, 1006-1030.
 Bils, Mark, and Peter J. Klenow (2004). "Some Evidence on the Importance of Sticky Prices," Journal of Political Economy, Vol. 112, No. 5, 947-985.
 Diewert, W. E. (1971). "An Application of the Shephard Duality Theorem: A Generalized Leontief Production Function," Journal of Political Economy, Vol. 79, No. 3, 481-507.
 Fisher, Douglas, Adrian R. Fleissig, and Apostolos Serletis (2001). "An Empirical Comparison of Flexible Demand System Functional Forms," Journal of Applied Econometrics, Vol. 16, No. 1, 59-80.
 Hallak, Juan Carlos (2006). "Product Quality and the Direction of Trade," Journal of International Economics, Vol. 68, No. 1, 238-265.
 Hallak, Juan Carlos, and Peter K. Schott (2005). "Estimating Cross-country Differences in Product Quality," Preliminary Draft, 10/17/2005.
 Hummels, David, and Peter J. Klenow (2005). "The Variety and Quality of a Nation's Exports," American Economic Review, Vol. 95, No. 3, 704-723.
 Klenow, Peter J. (2003). "Measuring Consumption Growth: The Impact of New and Better Products," Federal Reserve Bank of Minneapolis Quarterly Review, Vol. 27, No. 1, 10-23.
 Landefeld, J. Steven, and Bruce T. Grimm (2000). "A Note on the Impact of Hedonics and Computers on Real GDP," Survey of Current Business, Vol. 80 (December), 17-22.
 Stockman, Alan C. and Linda L. Tesar (1995). "Tastes and Technology in a Two-country Model of the Business Cycle: Explaining International Comovements," American Economic Review, Vol. 85, No. 1, 168-185.
 Varian, Hal R. (1982). "The Nonparametric Approach to Demand Analysis," Econometrica, Vol. 50, No. 4, 945-73.
 Varian, Hal R. (1983). "Non-Parametric Tests of Consumer Behaviour," Review of Economic Studies, Vol. 50, No. 1, 99-110.
Available Versions of this Item
- Separating Quantity Shock and Quality Innovation in Relative Prices. (deposited 08. Oct 2006) [Currently Displayed]