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To trim or not to trim? An application of a trimmmed mean inflation estimator to the United Kingdom

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  • Hasan Bakhshi
  • Tony Yates

Abstract

Although the target of monetary policy is clear, there have been suggestions that the conduct of monetary policy is improved by monitoring �trimmed mean� inflation rates, the mean of some central portion of the distribution of price changes. This paper assesses critically the theoretical and empirical arguments for trimming, and applies the concept of the 'optimal trim' to the United Kingdom.

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File URL: http://www.bankofengland.co.uk/archive/Documents/historicpubs/workingpapers/1999/wp97.pdf
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Bibliographic Info

Paper provided by Bank of England in its series Bank of England working papers with number 97.

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Date of creation: Jul 1999
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Handle: RePEc:boe:boeewp:97

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  1. Danny Quah & Danny Quah & Shaun P. Vahey, 1995. "Measuring Core Inflation," CEP Discussion Papers dp0254, Centre for Economic Performance, LSE.
  2. Ball, Laurence & Mankiw, N Gregory, 1995. "Relative-Price Changes as Aggregate Supply Shocks," The Quarterly Journal of Economics, MIT Press, MIT Press, vol. 110(1), pages 161-93, February.
  3. Michael F. Bryan & Stephen G. Cecchetti, 1994. "Measuring Core Inflation," NBER Chapters, in: Monetary Policy, pages 195-219 National Bureau of Economic Research, Inc.
  4. Anil K. Kashyap, 1991. "Sticky prices: new evidence from retail catalogs," Working Paper Series, Macroeconomic Issues 91-26, Federal Reserve Bank of Chicago.
  5. Caballero, Ricardo J & Engel, Eduardo M R A, 1993. "Heterogeneity and Output Fluctuations in a Dynamic Menu-Cost Economy," Review of Economic Studies, Wiley Blackwell, Wiley Blackwell, vol. 60(1), pages 95-119, January.
  6. Michael F. Bryan & Stephen G. Cecchetti & Rodney L. Wiggins II, 1997. "Efficient inflation estimation," Working Paper 9707, Federal Reserve Bank of Cleveland.
  7. Quah, Danny, 1995. "Measuring Core Inflation," CEPR Discussion Papers 1153, C.E.P.R. Discussion Papers.
  8. Balke, Nathan S. & Wynne, Mark A., 2000. "An equilibrium analysis of relative price changes and aggregate inflation," Journal of Monetary Economics, Elsevier, Elsevier, vol. 45(2), pages 269-292, April.
  9. Simon Hall & Mark Walsh & Anthony Yates, 1997. "How do UK companies set prices?," Bank of England working papers 67, Bank of England.
  10. Alan S. Blinder, 1994. "On Sticky Prices: Academic Theories Meet the Real World," NBER Chapters, in: Monetary Policy, pages 117-154 National Bureau of Economic Research, Inc.
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Cited by:
  1. 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.
  2. Fiorencio, A & Moreira, A.R.B., 2000. "O Núcleo da Inflação como a Tendência Comum dos Preços," Insper Working Papers, Insper Working Paper, Insper Instituto de Ensino e Pesquisa wpe_2, Insper Working Paper, Insper Instituto de Ensino e Pesquisa.
  3. Juan-Luis Vega & Mark A. Wynne, 2002. "A first assessment of some measures of core inflation for the euro area," Working Papers 0205, Federal Reserve Bank of Dallas.
  4. Wynne, Mark A., 1999. "Core inflation: a review of some conceptual issues," Working Paper Series, European Central Bank 0005, European Central Bank.
  5. Franco Mostacci & Roberto Sabbatini, 2003. "L 'euro ha creato inflazione? Changeover e arrotondamenti dei prezzi al consumo in Italia nel 2002," Moneta e Credito, Economia civile, vol. 56(221), pages 45-95.
  6. 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, Research Centre.
  7. Joanne Cutler, 2001. "Core Inflation in the UK," Discussion Papers, Monetary Policy Committee Unit, Bank of England 03, Monetary Policy Committee Unit, Bank of England.
  8. Pelin Berkmen, 2002. "Measuring Core Inflation for Turkey - Trimmed Means Approach," Central Bank Review, Research and Monetary Policy Department, Central Bank of the Republic of Turkey, vol. 2(2), pages 1-18.
  9. Silvia Fabiani & Angela Gattulli & Roberto Sabbatini, 2003. "La rigidità dei prezzi in Italia," Moneta e Credito, Economia civile, vol. 56(223), pages 325-358.
  10. Alan Mankikar & Jo Paisley, 2004. "Core inflation: a critical guide," Bank of England working papers 242, Bank of England.
  11. Vega, Juan Luis & Wynne, Mark A., 2001. "An evaluation of some measures of core inflation for the euro area," Working Paper Series, European Central Bank 0053, European Central Bank.
  12. Chrigui Zouhair & Boujelbene Younes, 2009. "The Opportunities for Adopting Inflation Targeting in Tunisia: a Cointegration Study and Transmission Channels of Monetary Policy," Transition Studies Review, Springer, vol. 16(3), pages 671-692, October.

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