Jason Furman Weighs in
He writes:
- I agree with Jared that the 30-year debate is a distraction. Worse than that, it lets Bush off the hook by making the last six years look like a continuation of a long-standing trend rather than something peculiarly bad. This was the point I tried to make in my TAP posting.
- I've never had a problem in the past making arguments about growing inequality and the minority of the gains going to the bottom 80 percent of Americans. I don't see why we need to make a levels argument to communicate this essentially relative point.
- I agree with Dean that we're far from certain about the magnitude or meaning of new goods bias, variety bias, outlet substitution bias, or quality bias.
- But I'm quite certain about upper-level substitution bias in the CPI. And unless someone tells me otherwise, I assume 0.34 percentage point per year is a reasonable estimate for it -- based on the first five years of the C-CPI-U. If we had a backcasted version of this we should all use it for intertemporal comparisons.
