TY  - JOUR
AU  - Bils,Mark
TI  - Measuring the Growth from Better and Better Goods
JF  - National Bureau of Economic Research Working Paper Series
VL  - No. 10606
PY  - 2004
Y2  - July 2004
UR  - http://www.nber.org/papers/w10606
L1  - http://www.nber.org/papers/w10606.pdf
N1  - Author contact info:
Mark Bils
Department of Economics
University of Rochester
Rochester, NY 14627
Tel: 585/275-0488
Fax: 585/256-2309
E-Mail: bils@troi.cc.rochester.edu
AB  - Using micro CPI data, I show that much of inflation for durable goods since 1988 reflects, not increases in price for a given set of products, but rather shifts to a newer set of product models that display higher prices. I examine how these price differences should be divided between quality growth and price inflation based on how consumer spending responds to product substitutions. For all goods examined (cars, other vehicles, televisions, and other consumer electronics), buying shifts to the newer models despite their higher prices. This suggests that quality growth for durables has averaged at least 5.8% per year, more than double the rate implied by CPI measurement.
ER  -