growth: De Long view

Brad De Long delong at econ.Berkeley.EDU
Sun Mar 19 07:10:33 PST 2000

>Max Sawicky wrote:
>>Dean Baker in Getting Prices Right explains the absurd
>>implications of the Boskin estimate. I got a version
>>of BDL's latest in garbled format so didn't read it closely,
>>but it reminded me of the illustrious Cox and Alm. I'll
>>see what Dean has to say about it. I sense BDL is crawling
>>out on a weak limb. Hope he's got a safety net.
>Well for one, Boskin & Co. didn't look at a single reason why the
>CPI might understate inflation, even though ex-BLS commish Janet
>Norwood said there were plenty of reasons to think it might (e.g.,
>declining quality of some services). And for two, the membership of
>the Boskin commission was stacked so that only those with the
>highest known estimates of overstatement were appointed.

My belief is that the biggest hole in the Boskin Commission was its refusal to take the idea of a "CPI for the elderly" seriously. The idea that you could save money by shopping at WalMart is simply silly if you do not have a car or can no longer drive. Different people have different capacities to shop and shop at different places, and to apply the single CPI for all urban consumers to everyone (especially since the CPI is dollar-weighted rather than person-weighted) seems to me to be a big mistake...

Brad DeLong

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