Description: Is the fall in overall productivity growth in the United States and other developed countries related to the rising share of the service sectors in the economy? Since services represent well over half of the U.S. gross national product, it is also important to ask whether these sectors have had a slow rate of growth, as this would act as a major drag on the productivity growth of the overall economy and on its competitive performance. In this timely volume, leading experts from government and academia argue that faulty statistics have prevented a clear understanding of these issues. The contributors suggest that current measurement methodology may be underestimating the contribution of services to productivity growth in the economy as a whole. If government statistics understate output, then they also overstate price increases and misrepresent productivity growth. Such mismeasurement would distort our views of how fast incomes are growing and how high inflation is. When it comes to measuring output in services, it is not exactly clear what is being transacted, what the output is, and what precisely is covered by payment for a given service. Moreover, "service sectors" is ambiguous. For example, services are defined as whatever is nontangible and not a commodity, yet electricity, a tangible item, is considered a service, and gas, while regarded as a commodity if bottled, is a service when it comes from a pipe. Government economists from the Bureau of Economic Analysis and the Bureau of Labor Statistics offer a detailed evaluation of the present methods and theory underlying service sector statistics, including the consumer price index and labor productivity indexes. Other contributorsdiscuss wholesale and retail trade, the stock market, banking, education, day care, and transportation. The volume provides an international perspective with studies of France and Sweden, among other countries. The best currently available overview of present measurement practices and their short-comings, this volume also suggests possible solutions to the problems of calculating service sector statistics. It will be valuable reading for government economists concerned with these issues, as well as academic and business economists who study output, productivity growth, and inflation.

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