Economists have no real way of accurately measuring the fall in computer prices, as Doug knows better than I. In reality, computer prices have not fallen that much; instead, the quality of computer per dollar has increased. How do you measure quality? Memory, chip speed, bus speed ....?
On Mon, Feb 17, 2003 at 05:50:21PM -0500, Doug Henwood wrote:
> Timothy Francis-Wright wrote:
>
> >This reminds me of a question that I've been meaning to ask.
> >How much does price deflation of computers and other electronic
> >equipment affect the US "real" GDP?
>
> Dunno about broad electronic equipment, but the BEA does publish
> tables on computer and peripheral purchases in GDP
> <http://www.bea.gov/bea/dn/comp-gdp.XLS>. From those we learn (and
> computers includes peripherals):
>
> average annual growth rates, 1990-2000
>
> GDP 3.2%
> GDP less computers 2.9
> computers alone 34.1
> computer prices -17.9
>
> percent of total GDP growth, 1990-2000
>
> real 13.0%
> nominal 0.6
>
> So, excluding computers would lower growth rates by about 10% for the
> 1990s. SIgnificant, but not decisive. It is amazing, however, that
> they accounted for less than 1% of nominal growth, but 13% of real
> growth. The reason, of course, was that prices were falling an
> amazing 34% a year.
>
> Most other countries don't use U.S.-style techniques for adjusting
> computer prices, which attempt to capture performance improvements
> (increased processor speed, larger disk drives, etc.). Conceptually,
> the practice is defensible, but the BEA may be way too aggressive.
>
> Using a different set of stats, from the World Bank, shows U.S. GDP
> per capita growing an average of 1.8% a year from 1990-2000, and the
> euro area 1.6%. (Pop growth in the euro area is virtually 0%, while
> in the U.S. it's about 1%, which accounts for much of the difference
> in aggregate growth rates.) If you marked down the U.S. figure, or
> marked up the euro figure, by 0.2 points, the growth rates would
> nearly converge.
>
> Doug
-- Michael Perelman Economics Department California State University Chico, CA 95929
Tel. 530-898-5321 E-Mail michael at ecst.csuchico.edu