Why should Central Banks avoid the use of the underlying inflation indicator?
This paper assesses the usefulness of the commonly used underlying inflation indicator, in light of the criteria proposed in Marques et al. (2000). Empirical evidence for a group of six countries strongly suggets that the use of underlying inflation as an indicator of trend inflation should be avoided.
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- Michael F. Bryan & Stephen G. Cecchetti, 1994.
"Measuring Core Inflation,"
in: Monetary Policy, pages 195-219
National Bureau of Economic Research, Inc.
- Luis J. Álvarez & María de los Llanos Matea, 1999.
"Underlying Inflation Measures in Spain,"
9911, Banco de España;Working Papers Homepage.
- Robalo Marques, Carlos & Duarte Neves, Pedro & Morais Sarmento, Luis, 2003.
"Evaluating core inflation indicators,"
Elsevier, vol. 20(4), pages 765-775, July.
- Pedro Duarte Neves & Luís Morais Sarmento & Carlos Robalo Marques, 1999. "Evaluating core inflation indicators," Economic Bulletin and Financial Stability Report Articles, Banco de Portugal, Economics and Research Department.
- Michael F. Bryan & Stephen G. Cecchetti & Rodney L. Wiggins, 1997.
"Efficient inflation estimation,"
9707, Federal Reserve Bank of Cleveland.
- Alan S. Blinder, 1982. "The Anatomy of Double-Digit Inflation in the 1970s," NBER Chapters, in: Inflation: Causes and Effects, pages 261-282 National Bureau of Economic Research, Inc.
- Freeman, Donald G., 1998. "Do core inflation measures help forecast inflation?," Economics Letters, Elsevier, vol. 58(2), pages 143-147, February.
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