New Products, Quality Changes and Welfare Measures Computed From Estimated Demand Systems / Aviv Nevo.

Format:

Book

Author/Creator:

Nevo, Aviv.

Contributor:

National Bureau of Economic Research.

Series:

Working Paper Series (National Bureau of Economic Research) no. w8425.

NBER working paper series no. w8425

Language:

English

Subjects (All):

Cereals, Prepared--United States.

Cereals, Prepared.

Consumer price indexes--United States.

Consumer price indexes.

Physical Description:

1 online resource: illustrations (black and white);

Place of Publication:

Cambridge, Mass. National Bureau of Economic Research 2001.

Cambridge, Massachusetts : National Bureau of Economic Research, 2001.

Summary:

This paper examines the construction of a price index based on an estimated demand system. In principle the method examined can produce a price index that accounts for introduction of new products and quality changes in existing products. However, I isolate two key assumptions that have to be made in order to interpret the demand estimates into welfare measures. Using estimates of a brand-level demand system for ready-to-eat cereal I demonstrate the empirical importance of the assumptions. For the data I use, depending on the interpretation of the demand estimates, a price index can range between a 35% percent increase over the five years examined to a 2.4% decrease.

Notes:

Print version record

August 2001.