Measuring Economic Growth and Productivity

Chapter 15

Measuring consumer inflation in a digital economy

Marshall Reinsdorf ¹ , and Paul Schreyer ^{2       1} International Monetary Fund, Washington, DC, United States      ² OECD, Paris, France

Abstract

The effect on the household consumption price index from possible sources of error in capturing digital products depends on the weight of the affected products. To bound this effect, we apply weights based on the average structure of household consumption in OECD countries to a maximum plausible overstatement of price change for each affected or potentially affected product. The products account for about 35% of household expenditure in 2005, declining to 32% in 2015. The upper bound effect on the growth rate of the consumption ...