Evaluating core inflation indicators
AbstractThis paper proposes testable conditions that core inflation measures should satisfy. Trend inflation indicators calculated by Banco de Portugal are tested against this background. The major conclusion is that the so-called âunderlying inflationâ, the â10% trimmed meanâ, and the â25% trimmed meanâ do not meet the proposed conditions. However, they are satisfied by the â37-month centred moving averageâ, the âfirst principal componentâ and the âstandard deviation weighted CPIâ indicators. Yet, only the last two indicators can be used as useful core inflation measures, as the first one is not computable in real time.
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Bibliographic InfoArticle provided by Elsevier in its journal Economic Modelling.
Volume (Year): 20 (2003)
Issue (Month): 4 (July)
Contact details of provider:
Web page: http://www.elsevier.com/locate/inca/30411
Other versions of this item:
- Pedro Duarte Neves & Luís Morais Sarmento & Carlos Robalo Marques, 1999. "Evaluating core inflation indicators," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
- C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
- E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
- E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
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