Towards A Better CPI – Adjusting for Technological Change and Increased Housing Consumption

Abstract

This article looks at modifying the currently reported CPI by the Bureau of Labor Statistics to produce a “better” CPI. Comparisons are based on each alternative index’s ability to produce time series projections in line with measures reflecting changes in short term Treasury bill, consumer borrowing and default rates. Changes suggested include restricting attention to goods with little change in the consumer experience over time, accounting for changes in the housing stock over time, and removing some elements of the CPI that may distort the price series given how they are currently estimated.