Economic Review
Second Quarter 2001

Comparing Measures of Core Inflation
By Todd E.Clark 

Although many policymakers and analysts associate “core CPI inflation” with the CPI excluding food and energy, there are other measures of core consumer price inflation.  Like the CPI excluding food and energy, these other measures typically attempt to identify the underlying trend in CPI inflation by excluding certain components subject to large relative price changes.  The rationale is that unusual changes, such as the 14.2 percent increase in energy prices last year (December to December) or the 18 percent jump in tobacco prices from November to December 1998, are unlikely to be related to the underlying trend in CPI inflation.

Clark compares five different measures of core CPI inflation.  He reviews the concepts underlying the idea of core inflation and the measures examined in the article.  Three of the core measures have been developed in previous research, while two indicators are developed in the article.  Next, he evaluates the core inflation measures by three different criteria:  accuracy in tracking trend inflation, predictive content for future overall inflation, and complexity. 

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The New U.S. Meat Industry
By Alan Barkema, Mark Drabenstott, and Nancy Novack

A new meat industry is rapidly emerging in the United States, as food retailers, meat processors, and farms and ranches coalesce into fewer and larger businesses.  The industry’s rapid consolidation in recent years has triggered alarms that the industry’s new giants in retailing and processing could drive up food prices for consumers and drive down livestock prices for producers.  How should public policy respond to the industry’s consolidation?  And how can all participants in the industry—producers, processors, retailers, and consumers—benefit from its new structure?

Barkema, Drabenstott, and Novack examine the striking changes in the meat industry.  First, they describe how the industry is changing.  Then they examine the forces driving the industry’s consolidation.  Finally, they consider how consumers and industry participants are affected.  While current evidence is scant that market power has hurt either consumers or producers, the industry’s rapid consolidation nevertheless warrants vigilance.  At the same time, public policy might also play a role in ensuring that all participants in the market benefit from its new structure.

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Why Invest in Rural America—And How? A Critical Public Policy Question for the 21st Century
By Karl N. Stauber

Significant portions of rural America are in trouble. For some parts of rural America, the slow slide to no longer being economically, socially, or politically viable is within sight.  At the same time, without intending it, rural America appears headed for a land of the rich and the poor—a rural America of resorts and pockets of persistent poverty. 

Yet current rural policies are designed for the past, not the future.  In terms of public dollars committed, today’s rural policy focuses primarily on two areas—agriculture and manufacturing.  Neither focus can meet the future needs of rural people and their communities. 

In his paper presented at this year’s conference sponsored by the Center for the Study of Rural America, Exploring Policy Options for a New Rural America, Dr. Stauber discusses how a successful rural policy must be crafted with three key societal benefits in mind—the survival of the rural middle class, reducing concentrated rural poverty, and sustaining and improving the quality of the natural environment.

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