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Core Inflation Measures for Pakistan

Author

Listed:
  • Sadia Tahir

    (State Bank of Pakistan)

Abstract

An appropriate measure of monetary inflation is not only essential for taking prompt monetary policy decisions, but also in explaining them. Headline measure of inflation in terms of Consumer Price Index includes both monetary and short run non-monetary changes in prices. The concept of core inflation is to purge the components of transitory and non-monetary changes from the CPI basket. This is all the more desirable when distribution of price changes departs from normality, as is the case in Pakistan as well as in the other countries. Some of the alternative measures of core inflation are constructed in this paper and among these, it is found that trim-based measure compares favorably with those based on methods of excluding fixed items from the basket of CPI.

Suggested Citation

  • Sadia Tahir, 2003. "Core Inflation Measures for Pakistan," SBP Working Paper Series 04, State Bank of Pakistan, Research Department.
    • Handle: RePEc:sbp:wpaper:04
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    File URL: http://www.sbp.org.pk/repec/sbp/wpaper/wp04.pdf
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    References listed on IDEAS

    as
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    6. Eatzaz AHMAD & Sheena Naz ALI, 1999. "PERMANENT AND TEMPORARY PRICE VARIATIONS: A Decomposition Analysis based on Stochastic Forecasting Models," Pakistan Journal of Applied Economics, Applied Economics Research Centre, vol. 15, pages 55-72.
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    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Prakash Kumar Shrestha, 2006. "Some Measures of Core Inflation and Their Evaluations in Nepal," NRB Economic Review, Nepal Rastra Bank, Research Department, vol. 18, pages 37-69, April.
    2. Shahiduzzaman, Md, 2009. "Measuring Core Inflation in Bangladesh: The Choice of Alternative Methods," Bangladesh Development Studies, Bangladesh Institute of Development Studies (BIDS), vol. 32(1), pages 23-44, March.
    3. Muhammad Nadim Hanif & Javaid Iqbal & Syed Hamza Ali & Muhammad Abdus Salam, 2020. "Denoised Inflation: A New Measure of Core Inflation," Journal of Central Banking Theory and Practice, Central bank of Montenegro, vol. 9(2), pages 131-154.
    4. Ahmed M. Khalid, 2006. "Is Inflation Targeting the Best Policy Choice for Emerging Economies? A Survey of Emerging Market Experiences and Lessons for Pakistan," SBP Research Bulletin, State Bank of Pakistan, Research Department, vol. 2, pages 145-165.
    5. Abdul Aleem & Amine Lahiani, 2011. "Estimation and evaluation of core inflation measures," Applied Economics, Taylor & Francis Journals, vol. 43(25), pages 3619-3629.
    6. Muhammad Amin Khan Lodhi, 2007. "Evaluating Core Inflation Measures in Pakistan," SBP Working Paper Series 18, State Bank of Pakistan, Research Department.

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    More about this item

    Keywords

    Inflation; time-series data;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C22 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes

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