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An operational framework for the short-term forecasting of inflation


  • Maria K. Albani

    () (Bank of Greece)

  • Nicholas G. Zonzilos

    () (Bank of Greece)

  • Zacharias G. Bragoudakis

    () (Bank of Greece)


Over the last 15 years the Greek economy has made significant progress towards macroeconomic stability with a remarkable degree of inflation containment both in levels and volatility. These changes in inflation dynamics have implications for the short term forecasting of inflation. This paper proposes a framework to forecast Greek inflation (measured by both the National and the Harmonised indices, and the subcomponents of HICP) at an 18-month horizon by blending pure econometric model based forecasts with expert judgement. A rolling out of sample forecasting exercise as well as a battery of standard statistical tests suggests that the proposed underlying dynamic econometric model with the inclusion of variables reflecting economic activity, domestic and foreign costs, exchange rates etc. forecast encompasses simple benchmark specifications. This conclusion seems reasonably robust to alternative competing benchmarks.

Suggested Citation

  • Maria K. Albani & Nicholas G. Zonzilos & Zacharias G. Bragoudakis, 2007. "An operational framework for the short-term forecasting of inflation," Economic Bulletin, Bank of Greece, issue 29, pages 89-106, October.
  • Handle: RePEc:bog:econbl:y:2007:i:29:p:89-106

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    inflation forecasting;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications


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