IDEAS home Printed from https://ideas.repec.org/a/taf/oaefxx/v3y2015i1p1014252.html
   My bibliography  Save this article

Measuring core inflation in India: An asymmetric trimmed mean approach

Author

Listed:
  • Naresh Kumar Sharma
  • Motilal Bicchal
  • Caroline Elliott

Abstract

The paper seeks to obtain an optimal asymmetric trimmed mean-based core inflation measure in the class of trimmed mean measures when the distribution of price changes is leptokurtic and skewed to the right for any given period. Several estimators based on asymmetric trimmed mean approach are constructed and estimates generated by use of these estimators are evaluated on the basis of certain established empirical criteria. The paper also provides the method of trimmed mean expression “in terms of percentile score.” This study uses 69 monthly price indices which are constituent components of Wholesale Price Index for the period, April 1994 to April 2009, with 1993–1994 as the base year. Results of the study indicate that an optimally trimmed estimator is found when we trim 29.5% from the left-hand tail and 20.5% from the right-hand tail of the distribution of price changes.

Suggested Citation

  • Naresh Kumar Sharma & Motilal Bicchal & Caroline Elliott, 2015. "Measuring core inflation in India: An asymmetric trimmed mean approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1014252-101, December.
    • Handle: RePEc:taf:oaefxx:v:3:y:2015:i:1:p:1014252
    DOI: 10.1080/23322039.2015.1014252
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/23322039.2015.1014252
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/23322039.2015.1014252?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Hasan Bakhshi & Tony Yates, 1999. "To trim or not to trim? An application of a trimmmed mean inflation estimator to the United Kingdom," Bank of England working papers 97, Bank of England.
    2. Mr. Scott Roger, 2000. "Relative Prices, Inflation and Core Inflation," IMF Working Papers 2000/058, International Monetary Fund.
    3. Michael F. Bryan & Stephen G. Cecchetti & Rodney L. Wiggins II, 1997. "Efficient Inflation Estimation," NBER Working Papers 6183, National Bureau of Economic Research, Inc.
    4. Meyler, Aidan, 1999. "A statistical measure of core inflation," MPRA Paper 11362, University Library of Munich, Germany.
    5. Jonathan Kearns, 1998. "The Distribution and Measurement of Inflation," RBA Research Discussion Papers rdp9810, Reserve Bank of Australia.
    6. Carlos Robalo Marques & João Machado Mota, 2000. "Using the asymmetric trimmed mean as a core inflation indicator," Economic Bulletin and Financial Stability Report Articles and Banco de Portugal Economic Studies, Banco de Portugal, Economics and Research Department.
    7. Scott Roger, 1997. "A robust measure of core inflation in New Zealand, 1949-96," Reserve Bank of New Zealand Discussion Paper Series G97/7, Reserve Bank of New Zealand.
    8. Newey, Whitney & West, Kenneth, 2014. "A simple, positive semi-definite, heteroscedasticity and autocorrelation consistent covariance matrix," Applied Econometrics, Russian Presidential Academy of National Economy and Public Administration (RANEPA), vol. 33(1), pages 125-132.
    9. Jim Dolmas, 2005. "Trimmed mean PCE inflation," Working Papers 0506, Federal Reserve Bank of Dallas.
    10. Kar, Sujata, 2009. "Statistical Tools as Measures of Core Inflation for India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 44(2), pages 225-245.
    11. Das, Abhiman & John, Joice & Singh, Sanjay, 2009. "Measuring Core Inflation in India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 44(2), pages 247-273.
    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


    Cited by:

    1. Priyanka Sahu, 2021. "A Study on the Dynamic Behaviour of Headline Versus Core Inflation: Evidence from India," Global Business Review, International Management Institute, vol. 22(6), pages 1574-1593, December.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Luc Aucremanne & Guy Brys & Peter J Rousseeuw & Anja Struyf & Mia Hubert, 2003. "Inflation, relative prices and nominal rigidities," BIS Papers chapters, in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 81-105, Bank for International Settlements.
    2. Juan‐Luis Vega & Mark A. Wynne, 2003. "A First Assessment of Some Measures of Core Inflation for the Euro Area," German Economic Review, Verein für Socialpolitik, vol. 4(3), pages 269-306, August.
    3. Mick Silver, 2006. "Core Inflation Measures and Statistical Issues in Choosing Among Them," IMF Working Papers 2006/097, International Monetary Fund.
    4. Luc Aucremanne, 2000. "The use of robust estimators as measures of core inflation," Working Paper Research 02, National Bank of Belgium.
    5. Andrea Brischetto & Anthony Richards, 2006. "The Performance of Trimmed Mean Measures of Underlying Inflation," RBA Research Discussion Papers rdp2006-10, Reserve Bank of Australia.
    6. Andrade, Isabel & O'Brien, Raymond, 2007. "A measure of core inflation in the UK," Discussion Paper Series In Economics And Econometrics 0708, Economics Division, School of Social Sciences, University of Southampton.
    7. Vega, Juan Luis & Wynne, Mark A., 2001. "An evaluation of some measures of core inflation for the euro area," Working Paper Series 0053, European Central Bank.
    8. Gagik G. Aghajanyan, 2005. "Core inflation in a small transition country: choice of optimal measures," European Journal of Comparative Economics, Cattaneo University (LIUC), vol. 2(1), pages 83-110, June.
    9. Juan-Luis Vega & Mark A. Wynne, 2003. "A First Assessment of Some Measures of Core Inflation for the Euro Area," German Economic Review, Verein für Socialpolitik, vol. 4, pages 269-306, August.
    10. Zelda Blignaut & Greg Farrell & Victor Munyama & Logan Rangasamy, 2009. "A Note On The Trimmed Mean Measure Of Core Inflation In South Africa," South African Journal of Economics, Economic Society of South Africa, vol. 77(4), pages 538-552, December.
    11. Oguz Atuk & Mustafa Utku Ozmen, 2009. "Design and Evaluation of Core Inflation Measures for Turkey," Working Papers 0903, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    12. Todd E. Clark, 2001. "Comparing measures of core inflation," Economic Review, Federal Reserve Bank of Kansas City, vol. 86(Q II), pages 5-31.
    13. Mark A. Wynne, 2008. "Core inflation: a review of some conceptual issues," Review, Federal Reserve Bank of St. Louis, vol. 90(May), pages 205-228.
    14. Sadia Tahir, 2003. "Core Inflation Measures for Pakistan," SBP Working Paper Series 04, State Bank of Pakistan, Research Department.
    15. Jamie Armour, 2006. "An Evaluation of Core Inflation Measures," Staff Working Papers 06-10, Bank of Canada.
    16. Janet Koech & Mark Wynne, 2013. "Core Import Price Inflation in the United States," Open Economies Review, Springer, vol. 24(4), pages 717-730, September.
    17. Landau, Bettina, 2000. "Core inflation rates: a comparison of methods based on west German data," Discussion Paper Series 1: Economic Studies 2000,04, Deutsche Bundesbank.
    18. Vega, Juan Luis & Wynne, Mark A., 2001. "An evaluation of some measures of core inflation for the euro area," Working Paper Series 53, European Central Bank.
    19. Muhammad Amin Khan Lodhi, 2007. "Evaluating Core Inflation Measures in Pakistan," SBP Working Paper Series 18, State Bank of Pakistan, Research Department.
    20. José Manuel Belbute & Leonardo Dia Massala & Júlio António Delgado, 2015. "Assessing core inflation indicators: evidence for Angola," CEFAGE-UE Working Papers 2015_01, University of Evora, CEFAGE-UE (Portugal).

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:taf:oaefxx:v:3:y:2015:i:1:p:1014252. See general information about how to correct material in RePEc.

    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 CitEc recognized a bibliographic reference but did not link an item in RePEc 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 RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/OAEF20 .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.