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Statistical Tools as Measures of Core Inflation for India

Author

Listed:
  • Kar, Sujata

    (University of Petroleum and Energy Studies, Dehradun, Uttarakhand, India)

Abstract

The objective of this paper is to find out a measure of core inflation that could satisfy the major criteria suggested in the literature to judge how good a core inflation estimate is. Using WPI inflation for the period 1989:2 – 2005:12, the analysis shows that geometric exponential smoothing and weighted percentile are the most suitable statistical tools which can produce core inflation estimates that are efficient and have properties similar to WPI inflation. Further, while the core inflation estimates from geometric exponential smoothing can produce good forecasts of the benchmark, forecasts for the headline inflation is reasonable from weighted percentile for certain specific periods at a regular interval.

Suggested Citation

  • Kar, Sujata, 2009. "Statistical Tools as Measures of Core Inflation for India," Indian Economic Review, Department of Economics, Delhi School of Economics, vol. 44(2), pages 225-245.
    • Handle: RePEc:dse:indecr:0006
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    Citations

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    Cited by:

    1. Priyanka Sahu, 2021. "A Study on the Dynamic Behaviour of Headline Versus Core Inflation: Evidence from India," Global Business Review, International Management Institute, vol. 22(6), pages 1574-1593, December.
    2. Naresh Kumar Sharma & Motilal Bicchal & Caroline Elliott, 2015. "Measuring core inflation in India: An asymmetric trimmed mean approach," Cogent Economics & Finance, Taylor & Francis Journals, vol. 3(1), pages 1014252-101, December.

    More about this item

    Keywords

    Core Inflation; Statistical Tools; Out-of-sample Forecasts;
    All these keywords.

    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
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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