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NBER Working Papers and Publications
|November 1993||Econometric Estimates of Prices Indexes for Personal Computers in the 1990s|
with Ernst R. Berndt, Zvi Griliches: w4549
In this paper we construct a number of quality-adjusted price indexes for personal computers in the U.S. marketplace over the 1989- 92 time period. We generalize earlier work by incorporating simultaneously the time, age and vintage effects of computer models into a fully saturated parameterization, and then develop a corresponding specification test procedure. While the simple arithmetic mean of prices of models by year reveals a price decline of about 11% per year, use of a matched model procedure similar to that commonly used by government statistical agencies generates a much larger rate of price decline -- about 20% per year. Since the matched model procedure holds quality constant, it ignores quality change embodied in new models. When data on new and surviving models are used in ...
Published: Journal of Econometrics, vol. 68, (1995). pp. 243-268