Conference on Research in Income and Wealth: Measurement Issues in Economics - The Paths Ahead. Essays in Honor of Zvi Griliches, September 2003, Washington, DC

National Bureau Of Economic Research Inc, Cambridge MA

Investigators

Abstract

In recent years much greater professional attention has come to be focused on issues in economic measurement, not only by academic researchers and economic policy analysts, but also by professional economists in government economic statistical agencies. This attention is due, in part, to Federal Reserve Board Chairman Alan Greenspan, who indicated to the Senate Finance Committee in 1995 that he believed the U.S. consumer price index significantly overstated true price inflation. This belief was confirmed by the Boskin Commission, that concluded that the best estimate of the bias in the CPI was about 1.1% per year, and that a bias of this magnitude would cost the federal government around $1 trillion over the succeeding 12 years. Academic researchers like William Nordhaus also expressed skepticism that official statistics captured the true dynamism of the U.S. economy. This problem was attributed, in part, to the difficulty in measuring technological improvements in product quality, and, as Chairman Greenspan's 1998 remarks indicated, to persistent difficulty in estimating the output of the service sectors of the economy: "Indeed, the published data indicate that the level of output per hour in a number of service-producing industries has been falling for more than two decades. It is simply not credible that firms in these industries have been becoming less and less efficient for more than twenty years." Zvi Griliches was a leader in the effort to improve the quality of economic statistics, particularly in the field of price hedonics and quality change, and in area service sector output (it was he that coined the term "hard-to-measure" sectors in reference to services). In recognition of his contributions, the Conference on Research in Income and Wealth is sponsoring a conference in the Washington DC area, September 19-20, 2003, co-organized by Ernst R. Berndt and Charles R. Hulten. The proceedings will focus on the problems of measuring the price and quantities of those outputs and inputs that have proved particularly challenging: unresolved issues from past like the measurement of service sector output and the problem of estimating capital stocks and incomes; problems receiving much current attention such as the treatment of product quality change in the CPI and real output statistics; and emerging problems of defining output and measuring prices in sectors associated with the "New Economy". While each problem has its own peculiarities, a common thread runs through many of them: what, exactly, is the nature of the commodity in question and in what units should it be measured? Not only are these measurement issues intellectually challenging, but progress is being made, and the policy implications are profound. The CRIW will continue its long tradition of organizing and publishing results of research involving measurement of economic phenomena. Participants at the conference (presenters, discussants and attendees) will include diverse representatives from academia, government and the private sector who are engaged in the collection, interpretation and analysis of economic data. Special priority is being given to participation by individuals who previously have not had a great deal of exposure at NBER/CRIW and related academic conferences. The conference program will also include a user's guide paper describing the recent released BLS' s new time use survey data set.