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Cost of Living Indices: Why Use Them? — Brian Romanchuk

Summary:
One technical issue that comes up when looking at consumer price indices is that the concept of a “cost of living index” comes up. This is a technical definition, as opposed to the vaguely defined notion of a “cost of living” that is used in popular discussion.In most of my writing, I aim to explain technical concepts and debates in plain English. In this case, I am not going to attempt it. My feeling is that the specifics of this technical debate are not going to be meaningful to a general audience. Meanwhile, my attempt at explaining it may be more confusing that just reading the literature for someone with a technical background. Instead, I am just going to give a simplified explanation of why this debate happened in the first place, with just a tease of the underlying issues (as I

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One technical issue that comes up when looking at consumer price indices is that the concept of a “cost of living index” comes up. This is a technical definition, as opposed to the vaguely defined notion of a “cost of living” that is used in popular discussion.

In most of my writing, I aim to explain technical concepts and debates in plain English. In this case, I am not going to attempt it. My feeling is that the specifics of this technical debate are not going to be meaningful to a general audience. Meanwhile, my attempt at explaining it may be more confusing that just reading the literature for someone with a technical background. Instead, I am just going to give a simplified explanation of why this debate happened in the first place, with just a tease of the underlying issues (as I understand it).

Bond Economics
Cost of Living Indices: Why Use Them?
Brian Romanchuk
Mike Norman
Mike Norman is an economist and veteran trader whose career has spanned over 30 years on Wall Street. He is a former member and trader on the CME, NYMEX, COMEX and NYFE and he managed money for one of the largest hedge funds and ran a prop trading desk for Credit Suisse.

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