Is there a link to this article somewhere?
Travis ----- Original Message ----- From: "Doug Henwood" <dhenwood at panix.com> To: "lbo-talk" <lbo-talk at lbo-talk.org> Sent: Monday, February 02, 2004 1:15 PM Subject: [lbo-talk] hedonic pricing update
> [this is for you data geeks out there - from Merrill Lynch - very
> interesting...]
>
>
> Techonomics
>
> The Government Stops Reporting Real Computer Figures
> Reason for Report: Hedonic Pricing Update
>
> Highlights:
>
> * We previously have pointed out that the government's use of hedonic
> pricing, a price deflator that translates nominal into real dollars,
> appears to overstate technology demand.
>
> * The problem is mostly in the reporting of computer hardware. For
> example, applying hedonic pricing for 2000-03 multiplies the nominal
> dollar increase by eight times to come up with real dollars spent.
> That's money that no vendor saw and overstates real GDP and
> productivity growth, in our opinion.
>
> * The Bureau of Economic Analysis has stopped reporting the real
> computer hardware shipment figure used to calculate real GDP though
> it is still used in GDP calculations. It said, "Commerce was
> concerned the rapid price declines for computers made the figures
> misleading."
>
> * If it's misleading, we recommend that the government improve upon
> its hedonic pricing model to eliminate the exaggerated spending. But
> if the BEA continues to use the current model, it should at least
> report the real dollars and not just the nominal figures. Hiding the
> calculation does not help the users of economic data.
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>