Measuring Trends in Prices in a Dynamic Universe

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Measuring Trends in Prices in a Dynamic Universe

• Issues raised by the New Economy and how the UK
  ONS is addressing these.

(ONS)
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Challenges and opportunities of The New Economy

• New methods of selling (Internet)
• New Goods
• Sample replenishment (representativity)
• Adjusting for quality changes
• Exploiting new data sources.

Representativity
Solely Price change
Data Collection
(ONS)
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Internet - Current work

• Already included for some goods - books and
  flights
• Looking for other sources of weights data
• Expenditure question on EFS since 2001
• Wish to include for all significant expenditure
  but
• need good estimates of expenditure
• need good sample frame of sellers.
• need to deal with turnover of sellers

(ONS)
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New Goods

• Definition
• A good providing an entirely new service
• Treatment
• Annual basket update
• Expenditure threshold
• Can lead to time-lag
• Do we wish to include before threshold reached?

(ONS)
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Work on representativity

• Improve by
• PPS sampling of initial sample
• Resampling twice a year
• Introducing explicit quality adjustment
• change replacement strategy from most similar to
  best sold.

(ONS)
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Quality Adjustment current situation in the RPI.
(ONS)
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Hedonic Methods for PCs

• We have
• produced hedonic adjustment estimates for PCs
• used these to produce a quality adjusted index
• compared this with those produced by option
  costs
• Examined the stability of the results over time
• comparing results for regressions on different
  months data

(ONS)
(ONS)
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Comparison of Option costs and Hedonic Methods
50 Option Cost
Index (January 100)
100 Option Cost
Hedonic - March data
(ONS)
Oct
Nov
Sep
Dec
Month
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Exploitation of Electronic Data

• Cost effective (selling, advertising, both)
• Possible issues
• Good needs to be available
• Delivery charges
• Attribute data
• Updating of web-site.

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Analysis of the New Economy in the Basque Country
Cristina Prado Valle EUSTAT
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Aim

• To measure some aspects of the New Economy in
  the Basque Country from a productive viewpoint

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Index

• Dimension of the ICT industry
• Knowledge-based economy
• Intangible investment
• Dimension of the Knowledge-based economy
• Impact on production, prices and costs

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Main problems

• The concepts used
• The Economic Classifications
• The expenditure of intangibles is not elaborated
  systematically

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Information and Communications Technology Industry

• The dimension of ICT industry in Basque Country

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Delimitation ICT
OECD
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Methodology

• Main aggregates
• Employed personnel
• Gross Value Added
• Foreign Trade Balance
• Productivity
• Statistical used
• Annual Industrial Survey
• Statistics on Services to Companies
• Trade Survey

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ICT Dimension Gross Value Added
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ICT Dimension Evolution

• ICT annual growth gt global economy growth
• Generator of wealth
• Productivity higher than the rest of the sectors

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Knowledge-based economy

• The dimension on Basque Country

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Aims

• Check an quantify the importance of tangible
  goods
• Know the structural weight and evolution of
  activities based on knowledge

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Delimitation of intangible goods
Intangible activities OECD
Actividad
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Intangibles investment growth in Basque Country
1995-1998 EVOLUTION. TANGIBLE AND INTANGIBLE GOODS
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Knowledge-based economy growth
Annualized growth
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Impact of new technologies on production prices
and cost
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Impacts on prices and costs

• Methodologyinput-output analysis
• Results

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Sectors with higher reductions prices
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ICT contribution to economic performance in
Belgiumpreliminary evidenceFPB Working Paper
7-02 at www.plan.be
August 27, 2002

• Chantal Kegels,
• Mary van Overbeke and
• Willem Van Zandweghe

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Overview
Overview

• The impact of ICT at macroeconomic and at
  sectoral level

• How can ICT affect labour productivity growth?
  Theoretical framework

• Contribution of ICT capital to Belgian
  macroeconomic growth in the 1990s

• Sectoral analysis
• Productivity in intensive and non-intensive ICT
  using sectors
• Detailed analysis of productivity and employment
  in Belgian business sectors

• Conclusions

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Theoretical framework ICT and labour
productivity growth
Output growth
Growth in number of hours worked
Labour productivity growth
TFP growth in ICT producer sector
TFP growth in ICT user sectors
ICT capital deepening
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Macroeconomic impact of ICT ICT capital deepening
Decomposition of labour productivity growth ()
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Macroeconomic impact of ICT TFP growth channels

• TFP growth in the ICT producing sector
• ICT manufacturing sector, where highest technical
  progress is recorded, is small in Belgium

• Is the acceleration of TFP growth in the second
  half of the 1990s associated with the use of ICT?
• TFP growth may be catching up after slow growth
  early 1990s
• Spillover effects at macroeconomic level
  incompatible with slow diffusion of ICT in Belgium

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Productivity and employment in ICT sectors
Average annual growth rate (), 1995 - 1999
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Productivity and employment manufacturing and
services
Average annual growth rate (), 1995 - 1999
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Conclusion

• Impact of ICT in Belgium rather weak due to
• Slow ICT diffusion
• Small ICT producer sector
• Some Belgian sectors are early ICT users
• Sharp productivity growth
• Heterogeneous employment evolution
• Importance of ICT producers in productivity and
  employment performance
• Different productivity/employment trade-off in
  ICT intensive and non-intensive user sectors
• Different performance of ICT user services and
  ICT user manufacturing industries
• Main future research

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Macroeconomic impact of ICT data

• ICT investment expenditure
• Direct detailed ICT investment only available
  for 1995

• Indirect time series 1978-2000 of ICT investment
  expenditure
• Domestic supply of ICT assets, calculated as
  domestic production imports exports
• Approximate investment expenditure by 1995 ratio
  of investment over domestic supply

• Constant price (quality-adjusted) ICT investment
•  Harmonised  price index U.S. hedonic price
  index adjusted for relative changes of the
  general price level in Belgium and the U.S.

• Capital stocks

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A detailed analysis of the Belgian case
Contribution to the growth of private business
sector value added
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ICT and Business Performance in Italy

• by Fabiola Riccardini
• Istat - National Statistical Institute of Italy
• IAOS Conference London 2002
• Official Statistics and New Economy

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Contents of presentation

• Objectives of the research project
• Methodology
• Topics of the paper and main conclusions
• Future steps

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Objectives of the research project

• The paper is a part of a research project which
  analyse relationships between the new information
  economy and business activity. The project is
  based on official statistics, and on the Italian
  case study.
• It is aimed at enhancing knowledge on the
  determinants and impacts of ICT behaviour in the
  economy, while dealing with measurement issues
  such as indicators choice, survey design, source
  integration, and other tools and methods.
• this first step (the paper), focuses on the
  demand of ICT in relation to firms profiles in
  terms of some performance indicators within
  sectors and employment classes.

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Methodologyuniverse of reference, information
set, indicators

• corporate firms with at least ten persons
  employed in manufacturing and services, excluding
  financial activities, health, education and other
  services
• Istat ASIA business register, which contains
  employment micro-data of all active non
  agricultural enterprises for the years 1996-2000
• Data collected in Istat e-commerce survey, which
  is harmonised to the European survey on the use
  of ICT in enterprises in the years 2000-2001.
  7,400 respondents out of 12,000 questionnaires
  sent
• Chambers of Commerce administrative balance
  sheets database, which reports economic
  information on corporate firms, for the year 2000
  (latest available year)
• 4,300 corporate firms match all the data sets
• performance growth of employment, fixed capital
  intensity, labour productivity, profitability

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Contents and main conclusions (1)

• The paper profile of the Italian business
  (part 1), taking into account its structural
  features in comparative perspective, and the
  employment and economic dynamics in the period
  1996-2000 (economic activities and business size.
  The ICT adoption behaviour is considered,
  comparing it to other OECD countries and tracking
  the specific sectoral and dimensional features in
  2000 and 2001 (part 2). Employment and economic
  performances are then associated with ICT
  adoption (part 3)
• Conclusions
• 1. a strong overall correlation of ICT adoption
  with enterprise size, with important sectoral
  exceptions and specific patterns, witnessing how
  the organisational changes are related to the
  complexity of business activity and to the
  production process.
• 2. these results are compounded by the structural
  determinants identified for ICT adoption, among
  which appears to be relevant past employment
  growth history, except in the case of very large
  firms
• 3. and there is a strong correlation between
  business size and ICT adoption for all
  technologies an through all sectors and there is
  a deep contrast between services and
  manufacturing in terms of intensity of ICT usage
  and dimensional relation and ICT
• 4. the sectoral pattern of ICT adoption appears
  to be largely affected by the linkages between
  the features of technology, characteristics of
  productions, and prevalent business sizes and
  organisation

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main conclusions (2)

• 5. the adoption/performance pattern observed
  confirms the opinions of firms reported in the
  Survey, which identified product specificity as
  the main obstacle for e-commerce development
• 6. an overall very mild positive effect on
  profitability, productivity, and employment is
  recorded, but sectoral specificity dominates a
  context in which very often the impact of ICT
  usage is not yet visible or not univocal
• 7. Italys relative specialisation in
  traditional sectors and reduced average
  business size probably have had a negative impact
  on absolute usage of ICT to now and more
  important, the positive impact on productivity of
  ICTs depend on human capital, which in Italy is
  low in comparison with other industrialised
  countries.
• 8. financial support to investment opportunities
  favours larger firms, in Italy there are few
  large firms
• 9. for SMEs is much more easy to purchase on the
  net instead of selling, and a districtual
  analysis, in which an entire value chain is taken
  into account, would show a different utilisation
  also for the SMEs. e-business along with an
  e-commerce analysis and the relationships between
  networking and ICT usage should be considered in
  the future

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main conclusions (3)

• 10. the analysis of performance effects revealed
  that the quality of work indicator shows a
  widespread investment in human resources for the
  ICT across industries
• 11. while e-commerce is not yet a significant
  factor for nearly all industries, especially for
  e-sales (exception H)
• 12. in the manufacturing sector, even if
  e-commerce is not widely considered as a factor
  of competitiveness, the access and the presence
  on networks has appeared to be successful for a
  group of industries. These results must be
  contrasted with the employment analysis, that
  suggests that the adoption of ICTs (web site and
  e-commerce) is often the result of a previous
  dynamism of the firm, that continues through
  time, so that the impact of these technological
  factors on performance is mixed with that of
  other aspects of firm behaviour and organisation.
  
• 13. development of other indicators (financial,
  innovation) and analysis on micro enterprises
  will be the following step
• 14. data availability limits the analysis

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Size of the ICT sector in Italy and other
countries percentage share of ICT value added
in business sector value added, 1999
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• Figure 1 comparative business sector employment
  sizes in Italy and the EU (15), 1997

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Relative employment dimension of ICT using vs.
non using firms (mean and median employment
ratios) usage of technologies in Italy, year
2001 business size, years 1996-2000
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From technologies to performance web site and
e-commerce in 1999 and employment in 2000 in
Italy
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Future steps

• a more thorough analysis will be deployed in the
  next months, taking into account existing
  networking behaviour (which in Italy is
  particularly relevant ) a wider firm data-set
• other data sources (innovation and RD surveys,
  professional training)
• other techniques for analysing data would
  complement the analysis
• a districtual analysis, in which an entire value
  chain is taken into account, would show a
  different utilisation also for the SMEs.
• micro enterprises (with less than 10 employed)
  will be considered
• e-business along with an e-commerce analysis and
  the relationships between networking and ICT
  usage

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Industrial Productivity in Brazil in the
Nineties
Carmem Aparecida Feijó Paulo Gonzaga M. de
Carvalho
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The Proposal
Comparing Employment and Production Results from
Official Industrial Surveys in Brazil

• Brief description of the evolution of employment
  and industrial production in the 70s, 80s and
  90s
• Official Data for the Industrial Sector
• Monthly surveys from 1971 up to 2000
• Annual surveys from 1996 onwardas

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1970s 1980s

• Import Substitution Process is completed with the
  National Development Plan
• Contribution of Manufacturing Industry to GDP
  increased from 29 in 1970 to 34 in 1980.
• Industrial Output and Employment grew together
• Industrial Productivity grew 4.5 in average

• Macroeconomic adjustment programs and
  stabilisation plans predominate
• little room for industrial policy
• In 1986 the first heterodox plan to fight
  inflation was adopted.
• Industrial Production stagnant and Industrial
  Employment decreased

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1990s
Period of Significant Changes in the Brazilian
Economy

• Inflation rates are stabilized after 1994.
• End of price controls
• Trade liberalization
• Privatization
• New environment for the operation of the firms
• Industrial Productivity increased along the
  decade with decrease in industrial employment.

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Official Statistical Data for Industrial Sector

• Statistical results of industrial productivity,
  based on monthly survey data, were under dispute
  in the nineties.
• At first, the increase in industrial
  productivity was seen as a short-term phenomenon
• Lately the debate turned to the amount of the
  increase in industrial productivity.
• First year of the new Annual Survey was 1996,
  released in 2000.

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Industrial Monthly Surveys and Industrial Indexes
Monthly Index of Physical Production is
obtained through a survey which investigates the
evolution of the production of a list of around
1000 products in 5000 establishments
approximately. The establishment sample is a
non-probabilistic sample of big industrial
producers, based on the 1985 Industrial Census.
Monthly Employment Index is based on a
probabilistic sample of industrial
establishments, drawn from an even older Business
Register, based on the 1980 Industrial Census.
This survey was interrupted in April 2001,
being substituted by another one with results for
2002.
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The Annual Survey

• In 2001 the Brazilian Statistical Office
  released comparable annual results for the
  1996-99 period for the Brazilian industry. In
  2002 the year 2000 was released.
• The annual survey covers all firms with 30 or
  more people employed (26 132 firms in 2000) and a
  probabilistic sample is draw for the rest of the
  population.
• According to the Business Register, the total
  number of industrial firms in 2000 was 135 887,
  and the annual industrial survey collected
  information in 37 146 firms.

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• Brazilian Manufacturing Industry
• Annual Industrial Survey and Monthly Industrial
  Survey
• 1996100

Years Employment Value Added Productivity
AS MS AS MS AS MS 1996 100 100 100 100 100 10
0 1997 97.3 94.3 103.8 103.6 106.7 109.8 1998 95
.2 85.6 101.9 99.9 107.1 116.7 1999 97.3 79.3 104
.9 98.3 107.7 123.9 2000 103.8 79.7 109.7 104.1 1
05.7 130.5 Source Brazilian Statistical Office
- Annual Industrial Survey, Monthly Surveys.
deflated by the IPA-OG from Getulio Vargas
Foundation.
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Final Remarks

• The dilemma between speed X accuracy in
  statistical production.
• High inflation regime shortened the time horizon
  of economic decisions in the 80s and beginning
  of 90s.
• Short term statistics were more heavily demanded.
  
• Price stabilization and the opening of the
  Brazilian economy promoted quick changes in the
  economic scenario in the 90s.
• Increase demand for structural information about
  the economy.

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Final Remarks

• IBGE starts changing the industrial statistics
  production model in late 80s.
• This change took a long period to be completed.
• Annual Surveys results started being released in
  2000.
• The debate about the evolution of industrial
  productivity in the 90s was greatly based on
  monthly estimates.
• Monthly industrial surveys in the 90s could
  signalize the direction of changes in industrial
  structure, not the level of change.