Missing growth from creative destruction

摘要

While inflation of an unchanging product or service can be computed easily, it is not straightforward to estimate inflation due to product improvement and variety expansion. In the Producer Price Index, the inflation is about 2% per month. However, it is found that this index may not capture changes from introduction of product varieties because it does not consider bias due to creative destruction. When the producer of an outgoing item does not produce the ingoing item, imputation is used on inflation by inducing a price growth on surviving products that are not creatively destroyed. Since creative destruction is an important source of economic growth, it is necessary to quantify the missing growth - which is the difference between actual and measured productivity growth. Quality improvements can be performed on existing products or new ones (creative destruction). The model presented predicts missing growth because of creative destruction when imputation is used. An actual estimation of missing growth is done using US Census data on employment at all private non-farm businesses. (44 refs.)