Getting Prices Right: The Debate Over the Consumer Price IndexCompiled by the Bureau of Labor Statistics, the CPI is used to index Social Security payments and many other federal programs, as well as to adjust tax brackets. Today, the accuracy of the CPI is being hotly debated, particularly in light of the Boskin Commission report that concluded in December 1996 that the CPI overstates inflation by 1.1%. If accepted and applied in the formulation of economic policy, the report would have major implications for balancing the federal budget. It would have a direct impact on the lives of Americans who are beneficiaries of government programs as well as on everyone who pays taxes. In this book, Dean Baker introduces and explains the significance of the debate, presents the full text of the Boskin Commission report and finally discusses in a far-reaching and insightful analysis both the Commission's research methodology and its conclusions. |
Contents
Indexing the Federal Budget | 14 |
Quality Change and New Products | 29 |
Estimates of Biases by Type and in Total | 50 |
Conclusion | 65 |
PART 2 | 79 |
The Evidence for an Overstated CPI | 95 |
Is Inflation the Same for Everyone? | 125 |
The CPI and a CostofLiving Index Compared | 131 |
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Common terms and phrases
apparel appliances areas average Berndt biases billion Boskin Commission Boskin Commission's conclusions budget Bureau of Economic cars commission's adjustment commission's estimate component computers constructed Consumer Expenditure Survey Consumer Price Index consumption cost of living cost-of-living index deficit discount stores drugs Economic Research economists estimates of bias expenditures federal fixed weight index formula bias Gordon Granny Smith Griliches hedonic regressions housing impact implies income issues Level Substitution Bias living index Lower Level lower-level substitution market basket measure ment methodology Moulton National Bureau NBER outlet substitution bias overstatement percent percentage points annually period personal computers poverty poverty line poverty threshold price changes problem procedures product bias quality adjustments quality bias quality change bias quality improvement rate of inflation rate of quality reduced relative prices rental Sears source of bias Statistics sumer tion understate upward bias wage Zvi Griliches