Using Inflation-Adjusted Dollars in Analyzing Political Developments

Inflation is a smaller political concernin recent years than in the late 1970s and early 1980s, as yearly price changes have fallen from as high as 12 % then to less than 3 % in recent years. Never-theless, inflation remains politically sig-nificant for a number of reasons: • Low inflation is a goal of economic policy and a measure of its success; • Inflation-adjustment for government benefits affects payments to Social Se-curity recipients and some others. The Boskin Commission (discussed below) estimated that by 1983 the Consumer Price Index (CPI) adjustments to Social Security, using what they believed to be