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| Topic: |
Business
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| Number of pages / Number of words: |
3 / 829 |
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Based on some dubious reasoning, this component of the CPI disappeared and was replaced by a so-called "owner's equivalent rent" instead of the real cost of home ownership. It has been calculated that this manipulation alone has served to understate inflation during the recent housing boom by 3 to 4 percentage points...
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It has been calculated that this manipulation alone has served to understate inflation during the recent housing boom by 3 to 4 percentage points. In the 1990's the CPI was subject to three other downward adjustments. Firstly, ‘product substitution': very conveniently, if a product (say high quality meat) gets too expensive, it is moved out of the CPI, because people are assumed to shift to a cheaper substitute, say hamburger...
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