Template-type: ReDIF-Article 1.0 Author-Name: Andrew Sharpe Author-Email: andrew.sharpe@csls.ca Title: Editor’s Overview Abstract: This twelth issue of the International Productivity Monitor, published by the Centre for the Study of Living Standards, differs from past issues. Five of the six articles address one topic, namely the impact of the Boskin Commission after one decade on price measurement. A final article discusses the role of information technology in the US growth resurgence. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias, Information Technology, Growth Resurgence Journal: International Productivity Monitor Pages: 1-4 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-editors-overview.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-mot-du-redacteur.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:0 Template-type: ReDIF-Article 1.0 Author-Name: Jack E. Triplett Title: The Boskin Commission Report: Introduction to the Symposium and Implications for Productivity Abstract: Brief introduction to the symposium highlighting the importance of price measurement for reliable productivity estimates. Accurate price indexes are essential for reliable productivity measurement. the author points out that a one percentage point upward bias in price changes results in a one percentage point downward bias in real output growth and by consequent productivity growth. An upward bias in price indexes implies that productivity growth is being underestimated. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias Journal: International Productivity Monitor Pages: 5-6 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-Triplett-intro-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-Triplett-intro-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:1 Template-type: ReDIF-Article 1.0 Author-Name: Robert J. Gordon Title: The Boskin Commission Report: A Retrospective One Decade Later 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. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias Journal: International Productivity Monitor Pages: 7-22 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-Gordon-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-Gordon-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:2 Template-type: ReDIF-Article 1.0 Author-Name: John S. Greenlees Title: The BLS Response to the Boskin Commission Report Abstract: The author provides a BLS response to the Boskin Commission from the perspective of ten years following the release of the report. He documents the research on price indexes done at the BLS in the first half of the 1990s that pointed to upward CPI bias, and discusses how these results eventually lead to the appointment of the Boskin Commission in 1995. He also provides a detailed discussion of the methodological changes to the CPI made by the BLS between 1996 and 2002 in three areas corresponding to the categories of bias identified by the Commission: upper and lower level substitution bias, quality change and new products,and outlet bias. These changes included the introduction of a chained CPI (CCPI-U), the introduction of more hedonic models and the recognition of the need to use a product and outlet sample that was as representative as possible of current consumer spending patterns. He concludes that the Boskin Commission, by forcing the BLS to scrutinize the strengths and limitations of its CPI procedures and by highlighting and publicizing the budgetary impacts of the CPI, paved the way for various CPI improvements. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias Journal: International Productivity Monitor Pages: 23-41 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-Greenlees-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-Greenlees-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:3 Template-type: ReDIF-Article 1.0 Author-Name: Jack E. Triplett Title: The Boskin Commission Report After a Decade Abstract: The author highlights the extremely salutatory effect the Boskin Commission has had on international price statistics, promoting open discussion of price measurement issues, engendering dialogue between statistical agencies and users, and encouraging research. Less positive in the author'sview has been the Boskin Commission’s popularization of “guestimates,” through its widely cited 1.1 percentage points CPI bias figure. The author also argues that the Commission ignored the possibility that quality improvements could actually produce a net downward bias to CPI components because the implicit quality adjustments inherent in the BLS procedures may over-adjust. He points out that the motivation for the appointment of the Boskin Commision was highly political, namely a desire to reduce Social Security expenditures by indexing benefits to a lower rate of increase than the CPI. He argues that it would have been preferable to separately address the distinct issues of CPI measurement and principles for allocation of resources to the dependent population. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias Pages: 24-60 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-Triplett-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-Triplett-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:4 Template-type: ReDIF-Article 1.0 Author-Name: Ernst R. Berndt Title: The Boskin Commission Report After a Decade: After-life or Requiem? Abstract: The author provides a political economy interpretation of the rise and fall of public interest in price measurement, placing these developments in the context of the attempt by Congress and the White House to deal with growing deficits in the early to mid-1990s. He provides a detailed discussion of initiatives since the Boskin Commission, such as the National Academy of Sciences panel, to improve CPI measurement. The author examines the thorny issue of the CPI for health care, with particular reference to the Boskin Commission recommendation that BLS move from pricing health care inputs to pricing health care outcomes. He concludes that the BLS has responded constructively to the recommendations from the various price measurement initiatives. By implementing many of the methodological changes suggested, the BLS has reduced net CPI inaccuracy and increased professional confidence in the reliability of the CPI. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias Journal: International Productivity Monitor Pages: 61-73 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-Berndt-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-Berndt-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:5 Template-type: ReDIF-Article 1.0 Author-Name: Martin Neil Baily Title: Policy Implications of the Boskin Commission Report 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. Classification-JEL: O47, O51, C82, E31, E61, B41, C80, E65 Keywords: United States, Boskin Commission, Boskin, Measurement, Prices, Consumer Price Index, CPI, Bias, CPI Bias, Consumer Price Index Bias Journal: International Productivity Monitor Pages: 74-83 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-Baily-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-Baily-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:6 Template-type: ReDIF-Article 1.0 Author-Name: Daniel E. Sichel Title: Accounting for Growth from A to Z: Review Article on Information Technology and the American Growth Resurgence Abstract: The author reviews the book Information Technology and the American Growth Resurgence by Dale Jorgenson, Mun Ho, and Kevin Stiroh, which provides a detailed analysis of the remarkable rebound in productivity and output growth in the last decade. He notes that the book can be considered a “Users’ Guide” to growth accounting and is highly recommended in this regard. The author reviews in an even-handed manner the critiques that have been put forward of the growth accounting methodology presented by Jorgenson et al. His bottom line is that while many of the critiques make valuable points, there is currently no alternative methodology to growth accounting that offers such a comprehensive framework for assessing the sources of economic growth. He also reviews the story put forward by Jorgenson et al. where in the mid-1990s the constant-quality prices of semiconductors fell substantially, leading to rapid declines in the price of Information Technology (IT) capital goods. Firms responded by substituting capital purchases toward IT capital, resulting in a surge in IT capital deepening and labour productivity growth. One limitation of the book is that it provides no analysis of the post-2000 US productivity growth acceleration, which has taken place in a period when rapid IT capital deepening was not occurring. Classification-JEL: O47, O51, C82, E31, E61, B41, C80 Keywords: United States, Growth Accounting, Information Technology, Growth Resurgence, Labour Productivity Journal: International Productivity Monitor Pages: 84-93 Volume: 12 Year: 2006 Month: Spring File-URL: http://www.csls.ca/ipm/12/IPM-12-sichel-review-e.pdf File-Format: Application/pdf File-URL: http://www.csls.ca/ipm/12/IPM-12-sichel-review-f.pdf File-Function: version en français File-Format: Application/pdf Handle: RePEc:sls:ipmsls:v:12:y:2006:7