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Missing growth measurement in Germany

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  • Schreiber, Sven
  • Schmidt, Vanessa

Abstract

Using detailed establishment-level micro data, this paper analyzes for the German case the hypothesis by Aghion, Bergeaud, Boppart, Klenow, and Li (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.

Suggested Citation

  • Schreiber, Sven & Schmidt, Vanessa, 2021. "Missing growth measurement in Germany," Discussion Papers 2021/7, Free University Berlin, School of Business & Economics.
    • Handle: RePEc:zbw:fubsbe:20217
    DOI: 10.17169/refubium-29566
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    References listed on IDEAS

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    1. Rebekka Christopoulou & Philip Vermeulen, 2012. "Markups in the Euro area and the US over the period 1981–2004: a comparison of 50 sectors," Empirical Economics, Springer, vol. 42(1), pages 53-77, February.
    2. Philippe Aghion & Antonin Bergeaud & Timo Boppart & Simon Bunel, 2018. "Firm Dynamics and Growth Measurement in France," Journal of the European Economic Association, European Economic Association, vol. 16(4), pages 933-956.
    3. Elstner, Steffen & Feld, Lars P. & Schmidt, Christoph M., 2018. "The German productivity paradox: Facts and explanations," Ruhr Economic Papers 767, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    4. Anttila, Juho, 2018. "Missing Growth in Finland," ETLA Working Papers 60, The Research Institute of the Finnish Economy.
    5. Eeckhout, Jan & De loecker, Jan, 2018. "Global Market Power," CEPR Discussion Papers 13009, C.E.P.R. Discussion Papers.
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    More about this item

    Keywords

    creative destruction; price imputation; inflation measurement;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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