Abstract
Using detailed establishment-level micro data, this paper analyzes for the German case the hypothesis by Aghion et al. (2019), stating that officially published figures for real output growth would be systematically understated. The effect rests on overstated inflation estimates due to imputed prices for disappearing goods and services varieties, where measurable plant entry and exit dynamics play a crucial rule. Our main results regarding understated real output growth lie in the range of 0.39 to 0.54 average annual percentage points for 1998–2016, which is quite closely in line with existing findings for France, the USA, and Japan (in different periods). We also find that services sectors appear most affected, and that the effect in East Germany is somewhat larger. We investigate different market share proxies, provide additional robustness analysis and also discuss limitations of the approach.
Acknowledgment
Without implicating them in our mistakes and misinterpretations, the authors would like to thank especially Antonin Bergeaud, Sebastian Gechert, Till Strohsal, staff of the German Federal Statistical Office (Destatis/ Statistisches Bundesamt) as well as the participants of the 2019 IWH Halle meeting on micro data and macro questions, of the German Economic Association meeting (VfS 2020) and the ESEM 2021 meeting for helpful discussions. In addition, this manuscript has benefitted from constructive comments by anonymous referees during the review process at the GER.
Appendix A Quotes from technical documents
Concerning footnote 15; accessible at https://ec.europa.eu/eurostat/cache/metadata/en/prc_hicp_esms_de.htm (accessed on February 26th, 2020):
“18.5. Data compilation – Treatment of missing items and replacements
A replacement for a missing price observation in case of non-seasonal items is forced to be made in the third month at the latest.... Missing prices for the first or the second month are estimated using price movements based on the other price observations for the relevant product group. If there are less than five price observations for a certain product group in a Bundesland, the superior ECOICOP aggregate (4-digit-level) is to be used instead.”
“18.6. Adjustment – Adjustment for quality differences
The German Bundeslaender are in principle responsible for the price collection. For the main part of products, quality adjustments are therefore done by the Bundeslaender. The German statistical system applies agreed rules for the price collection, treatment of missing prices, and quality adjustment.
For those price series that can be collected centrally, explicit quality adjustment methods are very common (e. g. option pricing for cars, hedonics for PCs and used cars). Explicit methods have been implemented for price collection in the field (decentralized price collection).
For durables the general rules for the price collection have been supplemented by detailed rules. These rules for durables contain explicit standards for the treatment of missing prices, replacement and quality adjustment, and are once again supplemented by a database containing quality determining characteristics. This database is filled monthly by the data collected for the compilation of the CPI. The most common methods used for durables are option pricing, consumption equivalence method, and bridged overlap.”
Concerning footnote 18, German original from Statistisches Bundesamt (2018: p. 9):
Dennoch können Informationen berechtigter Weise fehlen, zum Beispiel wenn eine Erhebungseinheit nicht besucht werden kann (Betriebsferien) oder eine Beobachtungseinheit, zum Beispiel aus saisonalen Gründen, nicht erfasst werden kann. Für solche zeitlich begrenzt auftretenden Ausfälle kennt das Aufbereitungsprogramm Fortschreibungsmechanismen, die eine Verzerrung verhindern sollen. Diese automatisierten Berechnungen werden durch spezielle Signierungen angestoßen. Im Falle dauerhafter Ausfälle (zum Beispiel in Folge einer Betriebsschließung oder dem Wegfall eines Gutes) müssen die Erhebungsbeauftragten umgehend Ersatz suchen. Für diese Ersetzung von Beobachtungs- und Erhebungseinheiten gibt es allgemeine Vorgaben. Die Preiserheberinnen und Preiserheber werden dafür besonders geschult. In der Folge wird jeder Einzelfall einer dafür speziell qualifizierten Mitarbeiterin beziehungsweise einem speziell dafür geschulten Mitarbeiter des zuständigen Statistischen Amtes zur endgültigen Entscheidung beziehungsweise zur Präzisierung der weiteren Verfahrensweise angezeigt.
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