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The Boskin Commission Report: A Retrospective One Decade Later

  • Robert J. Gordon

The author summarizes the report’s methods, findings, and recommendations, and then reviews the comments and criticisms that appeared soon after the report was issued. Changes in CPI methodology are also summarized and assessed, as is recent research on related issues. Based on recent research, the author suggest that the bias estimate for 1995-96 should have been 1.2 to 1.3 percentage points, not 1.1 points. He estimates that the upward bias in the CPI has declined from the revised 1.2-1.3 percentage points in the Boskin era to about 0.8 points today. Yet he notes that the Boskin report, like most contemporary studies of quality change, failed to accord sufficient importance to the value of new products and increased longevity. Allowing for these, he concludes that the current upward bias in the US CPI is at least 1.0 percentage points per year.

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

Volume (Year): 12 (2006)
Issue (Month): (Spring)
Pages: 7-22

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Handle: RePEc:sls:ipmsls:v:12:y:2006:2
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  1. Alan G. WHITE & Jaison R. ABEL & Ernst R. BERNDT & Cory W. MONROE, 2005. "Hedonic Price Indexes for Personal Computer Operating Systems and Productivity Suites," Annales d'Economie et de Statistique, ENSAE, issue 79-80, pages 787-807.
  2. Jerry Hausman, 1997. "Cellular Telephone, New Products and the CPI," NBER Working Papers 5982, National Bureau of Economic Research, Inc.
  3. 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.
  4. William D. Nordhaus, 2002. "The Health of Nations: The Contribution of Improved Health to Living Standards," NBER Working Papers 8818, National Bureau of Economic Research, Inc.
  5. Katharine G. Abraham & John S. Greenlees & Brent R. Moulton, 1998. "Working to Improve the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 27-36, Winter.
  6. Robert J. Gordon, 2009. "Apparel Prices 1914-93 and the Hulten/Bruegel Paradox," NBER Chapters, in: Price Index Concepts and Measurement, pages 85-128 National Bureau of Economic Research, Inc.
  7. Griliches, Z. & Cockborn, I., 1993. "Generics and New Goods in Pharmaceutical Price Indexes," Harvard Institute of Economic Research Working Papers 1664, Harvard - Institute of Economic Research.
  8. Ernst R. Berndt & Anupa Bir & Susan H. Busch & Richard G. Frank & Sharon-Lise T. Normand, 2000. "The Medical Treatment of Depression, 1991-1996: Productive Inefficiency, Expected Outcome Variations, and Price Indexes," NBER Working Papers 7816, National Bureau of Economic Research, Inc.
  9. Brent R. Moulton & Karin E. Moses, 1997. "Addressing the Quality Change Issue in the Consumer Price Index," Brookings Papers on Economic Activity, Economic Studies Program, The Brookings Institution, vol. 28(1), pages 305-366.
  10. Matthew D. Shapiro & David W. Wilcox, 1997. "Alternative Strategies for Aggregating Prices in the CPI," NBER Working Papers 5980, National Bureau of Economic Research, Inc.
  11. P. D. Chwelos & E. R. Berndt & I. M. Cockburn, 2008. "Faster, smaller, cheaper: an hedonic price analysis of PDAs," Applied Economics, Taylor & Francis Journals, vol. 40(22), pages 2839-2856.
  12. William D. Nordhaus, 1998. "Quality Change in Price Indexes," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 59-68, Winter.
  13. Timothy F. Bresnahan & Robert J. Gordon, 1996. "The Economics of New Goods," NBER Books, National Bureau of Economic Research, Inc, number bres96-1, May.
  14. W. Erwin Diewert, 1998. "Index Number Issues in the Consumer Price Index," Journal of Economic Perspectives, American Economic Association, vol. 12(1), pages 47-58, Winter.
  15. Jerry Hausman & Ephraim Leibtag, 2007. "Consumer benefits from increased competition in shopping outlets: Measuring the effect of Wal-Mart," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 22(7), pages 1157-1177.
  16. Robert J. Gordon, 1990. "The Measurement of Durable Goods Prices," NBER Books, National Bureau of Economic Research, Inc, number gord90-1, May.
  17. Irving Shapiro & Matthew D. Shapiro & David W. Wilcox, 1999. "Quality Improvement in Health Care: A Framework for Price and Output Measurement," NBER Working Papers 6971, National Bureau of Economic Research, Inc.
  18. David Cutler & Mark McClellan & Joseph Newhouse, 1998. "The Costs and Benefits of Intensive Treatment for Cardiovascular Disease," NBER Working Papers 6514, National Bureau of Economic Research, Inc.
  19. Jack E. Triplett, 2006. "The Boskin Commission Report After a Decade," International Productivity Monitor, Centre for the Study of Living Standards, vol. 12, pages 24-60, Spring.
  20. Brent R. Moulton, 1996. "Bias in the Consumer Price Index: What Is the Evidence?," Journal of Economic Perspectives, American Economic Association, vol. 10(4), pages 159-177, Fall.
  21. Robert J. Gordon, 2000. "The Boskin Commission Report and its Aftermath," NBER Working Papers 7759, National Bureau of Economic Research, Inc.
  22. Lawrence Slifman & Carol Corrado, 1999. "Decomposition of Productivity and Unit Costs," American Economic Review, American Economic Association, vol. 89(2), pages 328-332, May.
  23. Joseph P. Newhouse, 2001. "Medical Care Price Indices: Problems and Opportunities / The Chung-Hua Lectures," NBER Working Papers 8168, National Bureau of Economic Research, Inc.
  24. Jaison R. Abel & Ernst R. Berndt & Alan G. White, 2003. "Price Indexes for Microsoft's Personal Computer Software Products," NBER Working Papers 9966, National Bureau of Economic Research, Inc.
  25. Gordon, Robert J., 1990. "The Measurement of Durable Goods Prices," National Bureau of Economic Research Books, University of Chicago Press, edition 1, number 9780226304557.
  26. David M. Cutler & Mark McClellan, 1996. "The Determinants of Technological Change in Heart Attack Treatment," NBER Working Papers 5751, National Bureau of Economic Research, Inc.
  27. Robert J. Gordon & Todd vanGoethem, 2005. "A Century of Housing Shelter Prices: Is There a Downward Bias in the CPI?," NBER Working Papers 11776, National Bureau of Economic Research, Inc.
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