Swedish study reveals hidden impact of price indexing on economic history.
The study looked at how using different methods to calculate prices can change our understanding of economic history. By analyzing data on electric motors in Sweden from 1900 to 1935, researchers found that using hedonic price indexes showed higher productivity growth in the industry during the 1920s. This method overestimates price decreases when prices are falling and overestimates increases when prices are rising. However, the overall impact on prices from using different methods remained similar over the entire period. The price decreases for electric motors in the 1920s were not as significant as those seen for ICT products in the 1990s, even when using hedonic indexing.