--- On Mon, 24 Mar 1997 18:46:02 +0000 Dean Baker <[EMAIL PROTECTED]> wrote: > > Warning: The Following is an Unpaid Commerical Advertisement > > > In December of 1996, the Boskin Commission released its report on > the accuracy of the Consumer Price Index. The Commission concluded that the > CPI overstates the true increase in the cost-of-living by 1.1 percentage > points annually. Since its release, this report has been widely used as a > justification for reducing the cost-of-living adjustment for Social Security > and other indexed programs such as food stamps and the earned income tax > credit. Income tax brackets are also indexed to the CPI. Therefore a lower > measured rate of inflation would lower the bracket cut-offs, thereby raising > taxes by pushing more income into higher brackets. The savings that would > result from a recalculated CPI have made it an attractive political solution > to the deficit. > > A lower measured rate of inflation also changes the path of real > wage growth. Many conservative economists are now arguing that the wage > stagnation of the last two decades was simply a result of measurement error, > that an accurately measured CPI would still show wages increasing at a > substantial pace. In fact, accepting the Boskin Commission's conclusions > would require re-writing virtually all of recent economic history. Clearly > this debate has some serious consequences. > > I will be putting out a book this fall titled "Getting Prices Right: > The Debate Over the Consumer Price Index". The book will consist of a short > introduction framing the issues, the Boskin Commission's report > (approximately 90 pages), my detailed response (approximately 100 pages), > Senate testimony by Katherine Abraham, Barry Bosworth, and Martin Feldstein, > and a comprehensive bibliography of work related to the issues raised in the > CPI debate. The book should give a basic understanding of all the key > issues. It is written at a level where it should be accessible to Washington > policy wonk types, which means it should be usable in intermediate or upper > level undergraduate classes. My essay includes more than twenty user > friendly graphs, which should help stave off narcolepsy. > > The following is the index from my essay: > > > Overview > > Section 1: The Implications of the Boskin Commission's Conclusions > > 1.1 The CPI in Economics > 1.2 The CPI in Economic Policy > > Section 2: The Evidence For an Overstated CPI > > 2.1 Substitution Bias > 2.2 Retail Outlet Substitution Bias > 2.3 New Goods and Quality Bias > 2.31 The Boskin Commission Estimate > 2.31a Introspection > 2.31b Misinterpreted Research Findings > 2.31c Questionable Extrapolations > 2.31d Ignoring Changes in BLS Procedures > 2.31e Misidentifying the Composition of the CPI > 2.32 Summing Up: Is There Evidence for Quality and New Goods Bias? > > Section 3: Is Inflation the Same For Everyone? > > Section 4: The CPI Compared With a Cost of Living Index > > Section 5: Conclusion: Is the CPI the Best Measure of Inflation? > > > Appendix 1: The Record on Adjusting for CPI Bias in Research by Commission > Members > > Appendix 2: Selected List of Quality Adjustments in New Cars Related to > Durability Since 1992 > > > The book will be published by M.E. Sharpe and will be available in time for > the fall semester. (I believe the price is $18.00). If anyone wants more > info, they contact me at "[EMAIL PROTECTED]". > > ---------------End of Original Message----------------- ------------------------------------- Name: Mark Weisbrot E-mail: <[EMAIL PROTECTED]> Preamble Center for Public Policy 1737 21st Street NW Washington DC 20009 (202) 265-3263 (offc) (202) 333-6141 (home) fax: (202)265-3647
