Comparing measures of core inflation
Although many policymakers and analysts associate “core CPI inflation” with the CPI excluding food and energy, there are other measures of core consumer price inflation. Like the CPI excluding food and energy, these other measures typically attempt to identify the underlying trend in CPI inflation by excluding certain components subject to large relative price changes. The rationale is that unusual changes, such as the 14.2 percent increase in energy prices last year (December to December) or the 18 percent jump in tobacco prices from November to December 1998, are unlikely to be related to the underlying trend in CPI inflation.> Clark compares five different measures of core CPI inflation. He reviews the concepts underlying the idea of core inflation and the measures examined in the article. Three of the core measures have been developed in previous research, while two indicators are developed in the article. Next, he evaluates the core inflation measures by three different criteria: accuracy in tracking trend inflation, predictive content for future overall inflation, and complexity.
Volume (Year): (2001)
Issue (Month): Q II ()
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- Michael F. Bryan & Stephen G. Cecchetti, 1993.
"Measuring Core Inflation,"
NBER Working Papers
4303, National Bureau of Economic Research, Inc.
- Marianne Baxter & Robert G. King, 1999.
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The Review of Economics and Statistics,
MIT Press, vol. 81(4), pages 575-593, November.
- Marianne Baxter & Robert G. King, 1995. "Measuring Business Cycles Approximate Band-Pass Filters for Economic Time Series," NBER Working Papers 5022, National Bureau of Economic Research, Inc.
- Tom Doan, "undated". "BKFILTER: RATS procedure to implement band pass filter using Baxter-King method," Statistical Software Components RTS00026, Boston College Department of Economics.
- Stephen G. Cecchetti, 1997.
"Measuring short-run inflation for central bankers,"
Federal Reserve Bank of St. Louis, issue May, pages 143-155.
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