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The Boskin Commission Report: A Retrospective One Decade Later

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  • Robert J. Gordon

Abstract

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.

Suggested Citation

  • Robert J. Gordon, 2006. "The Boskin Commission Report: A Retrospective One Decade Later," International Productivity Monitor, Centre for the Study of Living Standards, vol. 12, pages 7-22, Spring.
  • Handle: RePEc:sls:ipmsls:v:12:y:2006:2
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    References listed on IDEAS

    as
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    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. Are we overestimating inflation (again?)
      by Steve Cecchetti and Kim Schoenholtz in Money, Banking and Financial Markets on 2015-07-27 17:16:54
    2. 'Are We Overestimating Inflation (Again?)'
      by Mark Thoma in Economist's View on 2015-07-28 05:24:00

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    Cited by:

    1. Bilbiie, Florin O. & Fujiwara, Ippei & Ghironi, Fabio, 2014. "Optimal monetary policy with endogenous entry and product variety," Journal of Monetary Economics, Elsevier, vol. 64(C), pages 1-20.
    2. Michelle L. Barnes & Zvi Bodie & Robert K. Triest & J. Christina Wang, 2009. "TIPS scorecard: are TIPS accomplishing what they were supposed to accomplish?: can they be improved?," Public Policy Discussion Paper 09-8, Federal Reserve Bank of Boston.
    3. Lieu, Pang-Tien & Liang, Jung-Hui & Chen, Jui-Hui, 2008. "Consumer preferences and cost of living in Taiwan," Journal of Asian Economics, Elsevier, vol. 19(3), pages 224-235, June.
    4. John G. Fernald, 2015. "Productivity and Potential Output before, during, and after the Great Recession," NBER Macroeconomics Annual, University of Chicago Press, vol. 29(1), pages 1-51.
    5. Bruce D. Meyer & James X. Sullivan, 2009. "Five Decades of Consumption and Income Poverty," NBER Working Papers 14827, National Bureau of Economic Research, Inc.
    6. Hammermann, Felix & Flanagan, Mark, 2007. "What Explains Persistent Inflation Differentials Across Transition Economies?," Kiel Working Papers 1373, Kiel Institute for the World Economy (IfW).
    7. Robert J. Gordon & Ian Dew-Becker, 2008. "Controversies about the Rise of American Inequality: A Survey," NBER Working Papers 13982, National Bureau of Economic Research, Inc.
    8. Alcalá Francisco, 2009. "Time, Quality and Growth," Working Papers 201052, Fundacion BBVA / BBVA Foundation.
    9. Mark J Flanagan & Felix Hammermann, 2007. "What Explains Persistent Inflation Differentials Across Transition Economies?," IMF Working Papers 07/189, International Monetary Fund.
    10. Schmitt-Grohé, Stephanie & Uribe, Martín, 2012. "On quality bias and inflation targets," Journal of Monetary Economics, Elsevier, vol. 59(4), pages 393-400.
    11. Cuddington, John T, 2010. "Long-term trends in the Real real prices of primary commodities: Inflation bias and the Prebisch-Singer hypothesis," Resources Policy, Elsevier, vol. 35(2), pages 72-76, June.
    12. Bruce D. Meyer & Derek Wu, 2018. "The Poverty Reduction of Social Security and Means-Tested Transfers," NBER Working Papers 24567, National Bureau of Economic Research, Inc.
    13. Jeehoon Han & Bruce Meyer & James X. Sullivan, 2018. "Inequality in the Joint Distribution of Consumption and Time Use," Working Papers 2018-081, Human Capital and Economic Opportunity Working Group.
    14. repec:aea:aecrev:v:107:y:2017:i:10:p:3229-42 is not listed on IDEAS
    15. Byrne, David M. & Corrado, Carol, 2015. "Prices for Communications Equipment: Rewriting the Record," Finance and Economics Discussion Series 2015-69, Board of Governors of the Federal Reserve System (US).
    16. Daniel Melser & Iqbal A. Syed, 2013. "Prices over the Product Life Cycle: Implications for Quality-Adjustment and the Measurement of Inflation," Discussion Papers 2013-26, School of Economics, The University of New South Wales.
    17. László Bokor, 2010. "Optimality criteria of hybrid inflation-price level targeting," MNB Working Papers 2010/8, Magyar Nemzeti Bank (Central Bank of Hungary).
    18. Roberto M. Billi & George A. Kahn, 2008. "What is the optimal inflation rate?," Economic Review, Federal Reserve Bank of Kansas City, issue Q II, pages 5-28.
    19. 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.
    20. Guy M Meredith, 2007. "Debt Dynamics and Global Imbalances; Some Conventional Views Reconsidered," IMF Working Papers 07/4, International Monetary Fund.

    More about this item

    Keywords

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

    JEL classification:

    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence
    • O51 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - U.S.; Canada
    • C82 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - Methodology for Collecting, Estimating, and Organizing Macroeconomic Data; Data Access
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • B41 - Schools of Economic Thought and Methodology - - Economic Methodology - - - Economic Methodology
    • C80 - Mathematical and Quantitative Methods - - Data Collection and Data Estimation Methodology; Computer Programs - - - General
    • E65 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Studies of Particular Policy Episodes

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