Working Paper: NBER ID: w24023
Authors: Philippe Aghion; Antonin Bergeaud; Timo Boppart; Peter J. Klenow; Huiyu Li
Abstract: Statistical agencies typically impute inflation for disappearing products based on surviving products, which may result in overstated inflation and understated growth. Using U.S. Census data, we apply two ways of assessing the magnitude of “missing growth” for private nonfarm businesses from 1983–2013. The first approach exploits information on the market share of surviving plants. The second approach applies indirect inference to firm-level data. We find: (i) missing growth from imputation is substantial — at least 0.6 percentage points per year; and (ii) most of the missing growth is due to creative destruction (as opposed to new varieties).
Keywords: Creative Destruction; Productivity Growth; Imputation; Inflation
JEL Codes: O4
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| standard imputation procedures (C80) | missing growth (O41) |
| missing growth due to creative destruction (O49) | underestimation of productivity growth (O49) |
| imputation process (C26) | underestimation of growth (O40) |
| failure to account for creative destruction (O49) | biased measurements of productivity (D24) |