TY - JOUR
T1 - Product turnover and the cost-of-living index
T2 - Quality versus fashion effects
AU - Ueda, Kozo
AU - Watanabe, Kota
AU - Watanabe, Tsutomu
N1 - Funding Information:
* Ueda: Waseda University, 1-6-9 Nishi-Waseda Shinjuku-ku, Tokyo, 169-8050, Japan (email: kozo. ueda@waseda.jp); K. Watanabe: Canon Institute for Global Studies and University of Tokyo, 11th Floor, ShinMarunouchi Building 5-1 Marunouchi 1, Chiyoda-ku, Tokyo, 100-6511, Japan (email: watanabe.kota@ canon-igs.org); T. Watanabe: University of Tokyo, 7-3-1 Hongo, Bunkyo-ku, Tokyo, 113-8654, Japan (email: watanabe@e.u-tokyo.ac.jp). Virgiliu Midrigan was coeditor for this article. We would like to thank four anonymous referees, David Atkin, Erwin Diewert, Anil Kashyap, Frances Krsinich, Jan de Haan, Masahiro Higo, Takatoshi Ito, Etsuro Shioji, David Weinstein, and conference and seminar participants at ANU, the Asian Meeting of the Econometric Society, EEA-ESEM, the Meeting of the Group of Experts on Consumer Price Indices, the NBER Japan Project Meeting, the Summer Workshop on Economic Theory, UBC, UNSW, Waseda University, and RIETI (Research Institute of Economy, Trade, and Industry) for useful comments and suggestions. This research forms part of the project on “Understanding Persistent Deflation in Japan” funded by a JSPS Grant-in-Aid for Scientific Research (24223003). All remaining errors are our own.
Publisher Copyright:
© American Economic Journal: Applied Economics 2019.
PY - 2019
Y1 - 2019
N2 - This paper evaluates the effects of product turnover on a welfare- based cost-of-living index by incorporating the quality effect and the fashion effect. Employing scanner data for Japan for the years 1988-2013, we find that (i) the price and quantity of a new product tend to be higher than those of its predecessor at its exit; (ii) a considerable fashion effect exists for the entire sample period, while the quality effect is declining over time; and (iii) the discrepancy between the cost-of-living index estimated based on our methodology and the price index constructed only from a matched sample is not large.
AB - This paper evaluates the effects of product turnover on a welfare- based cost-of-living index by incorporating the quality effect and the fashion effect. Employing scanner data for Japan for the years 1988-2013, we find that (i) the price and quantity of a new product tend to be higher than those of its predecessor at its exit; (ii) a considerable fashion effect exists for the entire sample period, while the quality effect is declining over time; and (iii) the discrepancy between the cost-of-living index estimated based on our methodology and the price index constructed only from a matched sample is not large.
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U2 - 10.1257/MAC.20160403
DO - 10.1257/MAC.20160403
M3 - Article
AN - SCOPUS:85059129871
SN - 1945-7707
VL - 11
SP - 310
EP - 347
JO - American Economic Journal: Macroeconomics
JF - American Economic Journal: Macroeconomics
IS - 2
ER -