07/17/95

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Economist Boskin to head review of consumer price index

STANFORD -- Michael Boskin, the Tully M. Friedman Professor of Economics and senior fellow at the Hoover Institution, has been chosen by the Senate Finance Committee to chair a commission studying possible revisions to the consumer price index.

Boskin, a former chairman of the Council of Economic Advisers, is one of five economists selected to review the methodology to see if the index is an effective measure of cost of living increases. The index, a measure of the average changes in prices paid by consumers for a fixed market basket of goods and services, is used as the basis for adjustments in government entitlement programs and often in private sector wage negotiations.

The current methodology may overstate cost of living changes, according to testimony presented to the Senate Finance Committee. The new commission is to make an interim report Sept. 15, and issue its final recommendations by June 15, 1996.

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