Setting the Operational Framework for Producing Inflation Forecasts
AbstractHow should a central bank organize itself to produce the best possible inflation forecast? This paper discusses elements for building a comprehensive platform for an inflation forecasting framework. It describes the exercise of forecasting inflation as a production process, which induces a strict discipline concerning data management and collection, the use of a suitable statistical apparatus, and the exercise of sound communication strategies to reinforce reputation and credibility. The efficient organization of the central bank becomes critical in producing relevant macroeconomic forecasts, with special consideration to product design, the essential requirements needed in the forecasting process, and key related organizational issues. In addition, the paper proposes to factor the authorities’ policy responses into inflation forecasts to ensure consistency with the spirit of the inflation targeting framework.
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Bibliographic InfoPaper provided by Central Bank of Chile in its series Working Papers Central Bank of Chile with number 362.
Date of creation: May 2006
Date of revision:
Other versions of this item:
- Turgut Kisinbay & Eric Parrado & Rodolfo Maino & Jorge IvÃ¡n Canales Kriljenko, 2006. "Setting the Operational Framework for Producing Inflation Forecasts," IMF Working Papers 06/122, International Monetary Fund.
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