The Problem of Accounting for Productivity Change in the Construction Price Index

Abstract

In this article we first construct the input cost and input productivity price index for the Japanese construction industry and note the significant difference between the two. Next, we obtain, together with the two indexes, the output price index for government apartments and find that the input productivity index gives a much better approximation. Our output price index is the hedonistic price index. In the last section we compute capital stock for several industries and briefly discuss the bias in the growth rate of capital in using the input cost index.