American Economic Journal:
Macroeconomics
ISSN 1945-7707 (Print) | ISSN 1945-7715 (Online)
Product Turnover and the Cost-of-Living Index: Quality versus Fashion Effects
American Economic Journal: Macroeconomics
vol. 11,
no. 2, April 2019
(pp. 310–47)
Abstract
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.Citation
Ueda, Kozo, Kota Watanabe, and Tsutomu Watanabe. 2019. "Product Turnover and the Cost-of-Living Index: Quality versus Fashion Effects." American Economic Journal: Macroeconomics, 11 (2): 310–47. DOI: 10.1257/mac.20160403Additional Materials
JEL Classification
- C43 Index Numbers and Aggregation; Leading indicators
- E31 Price Level; Inflation; Deflation
- L11 Production, Pricing, and Market Structure; Size Distribution of Firms
- L15 Information and Product Quality; Standardization and Compatibility
- L81 Retail and Wholesale Trade; e-Commerce
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