2012-MGM23

Using Treasury Securities to Develop Inflation Indices

Management Track

MGM23_Presentation_UsingTreasurySecuritiestoDevelopInflationIndices_Cunningham

Abstract:

This paper examines inflation assumptions in Department of Defense cost estimates. Professional guidance allows and encourages the development of custom inflation indices, but there are few resources detailing the methodologies to develop those indices. We address that need by laying out detailed steps to develop defensible, custom, risk-adjusted inflation indices using techniques that leverage analysis of the spread and volatility between traditional US Treasury Securities and Treasury Inflation-Protected Securities.

Author(s):

C. Tyler Cunningham
Booz Allen Hamilton
Tyler Cunningham is an Associate in Booz Allen Hamilton’s Applied Economic Analysis Center of Excellence with over 9 years of experience in finance and cost analysis in the defense market. Tyler graduated from The University of North Carolina-Chapel Hill in 2001 prior to joining the Air Force as a Cost Analyst at the Space and Missile Systems Center-Los Angeles AFB, CA. He left the Air Force in 2007 to pursue his Master of Business Administration degree at The University of Texas-Austin. Since then, he has been working for Booz Allen Hamilton developing cost estimates and decision analysis studies for a wide range of clients including the Electronic Systems Center, Joint Forces Command, United States Air Forces Europe, Headquarters Air Force, and the US Army Intelligence Center of Excellence. Recently he was recognized as one of 6 experts in cost estimation at Booz Allen. He is a member of the Society of Cost Estimators and Analysts and a Certified Cost Estimator/Analyst (CCEA).

Joseph Parisi
Booz Allen Hamilton
Joseph Parisi is a Senior Associate at Booz Allen Hamilton and a member of the Business Analytics Team. Prior to joining Booz Allen Hamilton he was an officer in the United States Air Force. During his Air Force career he provided financial support to various space acquisition programs and operational units. His roles in the Air Force included: Comptroller, Prince Sultan Air Base, Financial Manager for the Milstar satellite program, Financial Analyst for MILSATCOM terminal program, and Professional Development Instructor, USAFA Prep School. Since joining Booz Allen Hamilton he has served as a key member of the Business Analytics team, providing specialized support to various DoD clients. Some of his key tasks include the Ground Moving Target Indicator Analysis of Alternatives (AoA), Common Aero Vehicle Mission Utility Analysis, Business Case Analyses for the Air Force Research Laboratory and Air Force Communication Agency, Commercial Wideband Satellite Program Estimate, Global Positioning System Ground Station Independent Cost Estimate, Prompt Global Strike AoA, and the Launch Enterprise Transformation Study. He is also an active member of the Society of Cost Estimators and Analysts and a Certified Cost Estimator/Analyst (CCEA).