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Comparing the measures of core inflation in India: trimmed mean and structural vector auto-regression approach

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  • Arundhati Mallick
  • Narayan Sethi

Abstract

This paper estimates core inflation through trimmed mean method and structural vector auto-regression (SVAR) method by using monthly data of wholesale price index (WPI) and index of industrial production (IIP) from April 2005 to March 2014 for India. In this paper, we have compared 25% trimmed mean and SVAR method and it was found that SVAR measure provides better results than trimmed mean method. In SVAR method, we found the exact movements of core and non-core shocks in impulse response functions and variance decomposition. It is based on the definitions of core inflation but trimmed mean method excludes the outliers in the price index, whereas SVAR method is difficult to estimate.

Suggested Citation

  • Arundhati Mallick & Narayan Sethi, 2014. "Comparing the measures of core inflation in India: trimmed mean and structural vector auto-regression approach," International Journal of Monetary Economics and Finance, Inderscience Enterprises Ltd, vol. 7(4), pages 288-301.
    • Handle: RePEc:ids:ijmefi:v:7:y:2014:i:4:p:288-301
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    Cited by:

    1. Muhammad Mohsin & Mohammad Nurunnabi & Jijian Zhang & Huaping Sun & Nadeem Iqbal & Robina Iram & Qaiser Abbas, 2021. "The evaluation of efficiency and value addition of IFRS endorsement towards earnings timeliness disclosure," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 26(2), pages 1793-1807, April.
    2. Adam Luthfi Kusumatrisna & Iman Sugema & Syamsul H. Pasaribu, 2022. "Threshold Effect In The Relationship Between Inflation Rate And Economic Growth In Indonesia," Bulletin of Monetary Economics and Banking, Bank Indonesia, vol. 25(1), pages 117-132, June.

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