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Pastimes : Clown-Free Zone... sorry, no clowns allowed

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To: flatsville who wrote (66616)	2/11/2001 10:11:27 AM
From: Mike M2	Read Replies (1) of 436258

Flats, I have pointed out before that there are two separate issues with respect to the use of hedonics. I see the Boskin commission recommendations as a cover story to slow the growth of entitlements but understating product price inflation as computed by the BLS. To the extent that product price inflation is understated real growth and productivity is overstated. The major factor which overstates growth and productivity is the Commerce Deptartments use of hedonics when computing Chain Weigthed GDP versus current dollars. Take a look at The Survey of Current Business or the Grandfather Economic Report Homepage the impact is huge. For example in 1998 investment spending in chained dollars increased by $137 billion but in current dollars actual spending was up $14 billion. The difference between the two has no economic relevance because it is a measure of dollars that were never spent. IMO the only reason for this practice is to overstate growth and productivity in an effort perpetuate the new era myth and support the bubble. Mike

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