I didn't see anything there about altering nominal GDP numbers to get
some different nominal GDP.
The quality adjustments go into the deflators and price indices.
Laurent GUERBY wrote:
On Thu, 2008-06-19 at 19:56 -0400, Max B. Sawicky wrote:
There is no "hedonic GDP" that I'm aware of. There are different price
indices that
can be used to deflate nominal GDP to get "real" measures. The
difficulty of measuring
real computer prices should be clear.
Yes all countries include quality factor for price indexes or GDP
deflator, but that's not what I was refering too here.
There are many pages on the web refering to another adjustment
inflating the nominal price when counting in GDP in the USA only, none
of those I found are authoritative hence my question about it :).
Two examples:
http://en.wikipedia.org/wiki/GDP_deflator
<<
In recent years, some commentators have expressed concern that the
national accounts may overstate spending on computer hardware because of
the way the hedonic index and implicit price deflator are used. It is
well-known that the prices of a unit of processor speed, a unit of
memory, and a unit of hard drive capacity have declined very quickly
since 1995. Therefore, the current-year (say, 2003) price deflator for
an entire computer - using the hedonic method - is less than one
relative to a base year of 1995. This means that when nominal spending
on computer hardware is divided by the deflator to give real spending on
computers, the number rises. (The "deflator" here is actually an
inflator!) From the second quarter of 2000 through the fourth quarter of
2003, the government estimated that real tech spending rose from $446
billion to $557 billion, when nominal spending only increased to $488
billion. Some analysts feel that this overstates the "true" spending on
computers by $72 billion.[citation needed] However, it is also true that
this extra $72 billion captures the increase in value and utility of the
computers that were purchased in 2003 as compared to 2000, due to the
former's superior quality and capability for the same nominal price as
the latter.
http://globaleconomicanalysis.blogspot.com/2005/05/grossly-distorted-procedures.html
<<
My biggest gripe with hedonics however, is not with CPI calculations but
as applied to the GDP. That computer that sold for $1000 two years ago
might sell for $800 today and have more memory and a faster CPU as well.
Yes that is price DEFALTION for sure and perhaps needs to be adjusted in
the CPI but is that any reason to adjust the GDP and say we sold more
computers in 2005 although price wise sales were REALLY down? The
logical answer is no, although that is not what we do.
I contacted the BEA today asking for the latest hedonic and imputation
measurements. They pointed me to some online articles and tables and
emailed me an Excel spreadsheet. Unfortunately the figures are severely
behind and the latest numbers for imputations was from 2003. The most
current figure I have for hedonic adjustment to the GDP is 2.257
TRILLION dollars which is roughly 22% of the GDP.
To the best of my knowledge the US is the only major country that
hedonically adjusts its GDP. I believe Japan was recently considering
using hedonic GDP estimates but I am not sure of the final outcome. To
me, price is price and sales are sales as far as GDP is concerned. To
say that we sold 50% more "whatever" in 2005 than 2004 although actual
PRICE sales of "whatever" have dropped seems absurd.
I haven't contacted the BEA (I'm a french citizen :), may be someone
has an authoritative answer?
BTW I've also been unable to find detalied price quality adjustment data
(for any country USA, France, etc...). I assume since it has been going
on for more than a decade, these adjustments should now represent quite
an awful lot of "real GDP" growth, all totally opaque and purely
government generated without any oversight by citizens.
Thanks!
Laurent
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