Advanced Search
MyIDEAS: Login to save this article or follow this journal

PCE and CPI inflation differentials: converting inflation forecasts

Contents:

Author Info

  • Craig S. Hakkio
Registered author(s):

    Abstract

    The Federal Reserve recently announced it will begin to release quarterly inflation forecasts based on the Personal Consumption Expenditure Price Index. As Chairman Bernanke said, the PCE index is generally thought to be ?the single most comprehensive and theoretically compelling measure of consumer prices.? At the same time, Bernanke said that ?no single measure of inflation is perfect, and the Committee will continue to monitor a range of measures when forming its view about inflation prospects,? including the Consumer Price Index. ; The public and private sectors alike will want to be able to convert CPI inflation forecasts released by various organizations to PCE inflation forecasts, and vice versa. But the inflation differentials for the two measures can change significantly over time. To convert between CPI and PCE inflation projections, economists must construct statistical models to explain and predict the inflation differentials (overall and core), recognizing that the differentials may change over time. ; Hakkio estimates a set of models that analysts can use to make such conversions.

    Download Info

    If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.
    File URL: http://www.kansascityfed.org/Publicat/Econrev/PDF/1q08Hakkio.pdf
    Download Restriction: no

    Bibliographic Info

    Article provided by Federal Reserve Bank of Kansas City in its journal Economic Review.

    Volume (Year): (2008)
    Issue (Month): Q I ()
    Pages: 51-68

    as in new window
    Handle: RePEc:fip:fedker:y:2008:i:qi:p:51-68:n:v.93no.1

    Contact details of provider:
    Postal: One Memorial Drive, Kansas City, MO 64198
    Phone: (816) 881-2254
    Web page: http://www.kansascityfed.org
    More information through EDIRC

    Order Information:
    Email:

    Related research

    Keywords: Inflation (Finance);

    References

    References listed on IDEAS
    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
    as in new window
    1. Cogley, Timothy, 2002. "A Simple Adaptive Measure of Core Inflation," Journal of Money, Credit and Banking, Blackwell Publishing, Blackwell Publishing, vol. 34(1), pages 94-113, February.
    2. Todd E. Clark, 1999. "A comparison of the CPI and the PCE price index," Economic Review, Federal Reserve Bank of Kansas City, Federal Reserve Bank of Kansas City, issue Q III, pages 15-29.
    3. Todd E. Clark & Michael W. McCracken, 2008. "Improving forecast accuracy by combining recursive and rolling forecasts," Working Papers, Federal Reserve Bank of St. Louis 2008-028, Federal Reserve Bank of St. Louis.
    4. Clinton P. McCully & Brian C. Moyer & Kenneth J. Stewart, 2007. "A Reconciliation between the Consumer Price Index and the Personal Consumption Expenditures Price Index," BEA Papers, Bureau of Economic Analysis 0079, Bureau of Economic Analysis.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as in new window

    Cited by:
    1. Mugera, Amin W. & Langemeier, Michael R. & Featherstone, Allen M., 2012. "Labor Productivity Growth in the Kansas Farm Sector: A Tripartite Decomposition Using a Non-Parametric Approach," Agricultural and Resource Economics Review, Northeastern Agricultural and Resource Economics Association, Northeastern Agricultural and Resource Economics Association, vol. 41(3), December.

    Lists

    This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

    Statistics

    Access and download statistics

    Corrections

    When requesting a correction, please mention this item's handle: RePEc:fip:fedker:y:2008:i:qi:p:51-68:n:v.93no.1. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (LDayrit).

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If references are entirely missing, you can add them using this form.

    If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.