Soviet Industrial Production, 1928 to 1955: Real Growth and Hidden Inflation

The mechanism of hidden inflation in Soviet industrial growth statistics between 1928 and 1950 is described. Hidden inflation arose when new products were substituted for old ones. Substitution biases in Soviet and Western growth estimates are compared; the extent of hidden inflation in the Soviet figures is estimated. The view that all Soviet growth series were exaggerated is qualified; the presumption that the lower a figure, the more reliable it must be is overturned. The Moorsteen paradox, hidden inflation in industry as a whole, but none in machine building where product innovation was most rapid, is explained. J. Comp. Econom., March 2000, 28(1), pp. 134–155. University of Warwick, Coventry CV4 7AL, England.