Some Measures of Core Inflation and Their Evaluations in Nepal
AbstractThis paper measures core inflation and evaluates their performance in Nepal. Concept of core inflation and survey of methodologies as well as international experiences and empirical evidence have been reviewed and analysed before measuring the core inflation in Nepal. An existence of asymmetric price distribution necessitates thealternative measure of inflation in place of traditional CPI-based headline inflation. Ultimately, by using exclusion method and stochastic measures, nine different types of core inflations have been computed. Empirical results show that core inflations perform better than the headline inflation in several aspects such as having less volatility, highly relating to money supply growth, and capturing the permanent component of headline inflation. Better core inflation is selected with the help of different performance criteria such as observing statistical properties, tracking trend inflation, finding the relationship with money supply, and the analysing the ability of capturing permanent component and forecasting capacity. However, no single core measure performs better in all aspects. Hence, a set of core inflation measures, namely exclusion based, weighted median and trimmed mean should be analysed in conducting the monetary policy in Nepal.
Download InfoIf 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.
Bibliographic InfoArticle provided by Nepal Rastra Bank, Research Department in its journal NRB Economic Review.
Volume (Year): 18 (2006)
Issue (Month): (April)
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.:
- Robert J. Barro, 1995.
"Inflation and Economic Growth,"
NBER Working Papers
5326, National Bureau of Economic Research, Inc.
- Quah, Danny & Vahey, Shaun P, 1995.
"Measuring Core Inflation?,"
Royal Economic Society, vol. 105(432), pages 1130-44, September.
- Danny Quah & Danny Quah & Shaun P. Vahey, 1995. "Measuring Core Inflation," CEP Discussion Papers dp0254, Centre for Economic Performance, LSE.
- Danny Quah & Shaun Vahey, 1995. "Measuring Core Inflation," Bank of England working papers 31, Bank of England.
- Tom Doan, . "RATS programs to replicate Quah and Vahey core inflation estimation," Statistical Software Components RTZ00139, Boston College Department of Economics.
- Quah, Danny, 1995. "Measuring Core Inflation," CEPR Discussion Papers 1153, C.E.P.R. Discussion Papers.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Dr. Bishnu Prasad Gautam).
If references are entirely missing, you can add them using this form.