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, information gathering, the use of a suitable statistical apparatus, and the exercise of sound communication strategies to reinforce reputation and credibility. It becomes critical how a central bank organizes itself to produce 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 into the process the authorities' policy responses to previous inflation forecasts in order to be consistent with the spirit of the inflation targeting framework.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 06/122.
Date of creation: 01 May 2006
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Other versions of this item:
- Jorge Canales-Kriljenko & Turgut Kisinbay & Rodolfo Maino & Eric Parrado, 2006. "Setting the Operational Framework for Producing Inflation Forecasts," Working Papers Central Bank of Chile 362, Central Bank of Chile.
- NEP-ALL-2006-08-05 (All new papers)
- NEP-CBA-2006-08-05 (Central Banking)
- NEP-ETS-2006-08-05 (Econometric Time Series)
- NEP-FOR-2006-08-05 (Forecasting)
- NEP-MAC-2006-08-05 (Macroeconomics)
- NEP-MON-2006-08-05 (Monetary Economics)
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