I thought that this stuff had been put to rest.
Richardson_D wrote:
> BLS DAILY REPORT, WEDNESDAY, MARCH 1,2000
>
> More than three years after concluding that the Consumer Price Index
> overstated inflation by 1.1 percentage points a year, a group of prominent
> economists says changes made to the index since then have narrowed the
> overstatement to about 0.8 of a percentage point a year. Their estimate is
> included in a report prepared for Senator Daniel Patrick Moynihan, the New
> York Democrat, by the General Accounting Office, which conducts
> investigations and audits for Congress. ... The economists were the members
> of a commission established by Congress to study the price index, which is
> widely used not just as a barometer of inflation but to set wages in union
> agreements and to recalculate tax brackets and Social Security benefits each
> year. The commission, headed by Michael J. Boskin of Stanford University,
> spent 18 months studying the index. In December 1996, the commission's five
> members reported that a variety of statistical problems had created an
> upward bias in the price gauge of between 0.8 and 1.6 percentage points
> annually, with their best guess being 1.1 percentage point. Since then, the
> Labor Department's Bureau of Labor Statistics has made seven changes in the
> way it calculates the index. In a letter accompanying the accounting
> office's report, Katharine G. Abraham, the commissioner of labor statistics,
> said the agency was continuing to develop and evaluate improvements to the
> index, but that it did not think it possible to put a specific number on the
> degree to which the index overstates inflation. ... Because of the ways in
> which the price index is used, even modest reductions in any upward bias
> could result in smaller wage increases for some workers, lower payments to
> Social Security recipients and higher tax bills for some people. ...
> (Richard W. Stevenson in New York Times, page C14).
--
Michael Perelman
Economics Department
California State University
[EMAIL PROTECTED]
Chico, CA 95929
530-898-5321
fax 530-898-5901
