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Policy Implications of the Boskin Commission Report

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  • Martin Neil Baily
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    Abstract

    The author supports the type of the back-of-the-envelope calculations of CPI bias that the Commission used so effectively to attract public attention to its report. In the area of quality adjustment, however, he criticizes the Boskin Commission for what he calls “premature extrapolation,” that is moving too quickly from a limited number of examples to a broad conclusion. He stresses the importance of high-quality data for policy decisions and observes that a better allocation of existing resources can improve economic statistics, suggesting that the creation of a unified statistical agency in the United States, like Statistics Canada, would streamline data collection and analysis. In terms of the issue of Social Security solvency, the author argues that use of the CPI to adjust social security benefits downward is not a preferred option. He concludes that the Commission should have advised Congress that it did not have an adequate scientific basis to recommend a specific quantitative adjustment to the CPI index used to adjust federal programs.

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    Bibliographic Info

    Article provided by Centre for the Study of Living Standards in its journal International Productivity Monitor.

    Volume (Year): 12 (2006)
    Issue (Month): (Spring)
    Pages: 74-83

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    Handle: RePEc:sls:ipmsls:v:12:y:2006:6

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    Related research

    Keywords: United States; Boskin Commission; Boskin; Measurement; Prices; Consumer Price Index; CPI; Bias; CPI Bias; Consumer Price Index Bias;

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    References

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    1. Feldstein, Martin & Liebman, Jeffrey B., 2002. "Social security," Handbook of Public Economics, in: A. J. Auerbach & M. Feldstein (ed.), Handbook of Public Economics, edition 1, volume 4, chapter 32, pages 2245-2324 Elsevier.
    2. Robert J. Gordon, 2005. "Apparel Prices 1914-93 and the Hulten/Brueghel Paradox," NBER Working Papers 11548, National Bureau of Economic Research, Inc.
    3. Jerry Hausman & Ephraim Leibtag, 2006. "Consumer Benefits from Increased Competition in Shopping Outlets: Measuring the Effect of Wal-Mart," CeMMAP working papers CWP06/06, Centre for Microdata Methods and Practice, Institute for Fiscal Studies.
    4. Michael J. Boskin, 1998. "Consumer Prices, the Consumer Price Index, and the Cost of Living," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 3-26, Winter.
    5. Ariel Pakes, 2003. "A Reconsideration of Hedonic Price Indexes with an Application to PC's," American Economic Review, American Economic Association, vol. 93(5), pages 1578-1596, December.
    6. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1.
    7. Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557, August.
    8. Martin Neil Baily & Eric Zitzewitz, 2001. "Service Sector Productivity Comparisons: Lessons for Measurement," NBER Chapters, in: New Developments in Productivity Analysis, pages 419-464 National Bureau of Economic Research, Inc.
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    Cited by:
    1. Marshall Reinsdorf & Jack E. Triplett, 2009. "A Review of Reviews: Ninety Years of Professional Thinking About the Consumer Price Index," NBER Chapters, in: Price Index Concepts and Measurement, pages 17-83 National Bureau of Economic Research, Inc.

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