THE USE OF UNIT VALUES TO MEASURE DEVIATIONS OF TRANSACTION PRICES FROM LIST PRICES.

The results reported in the Searle report have stimulated me to carry out an extensive study of unit value indices, based on a much more extensive body of data and much improved procedures as compared to the preliminary evidence contained in my ‘Measurement Bias in Price Indices for Capital Goods,’ published in this journal in June, 1971. Once again, the new study confirms the hypothesis that transaction prices of capital goods exhibit procyclical fluctuations relative to list prices. Machinery prices appear to have been considerably more flexible downward during the period of weak investment demand between 1957 and 1963 than indicated by the Wholesale Price Index (WPI), and more flexible upward during the subsequent expansion during 1963–69. This brief paper is a summary of the study. A complete and detailed report of results is contained in my forthcoming monograph. Measurement of Durable Goods Prices, to be published by the National Bureau of Economic Research. [ABSTRACT FROM AUTHOR]