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A new approach to measuring core inflation for Turkey: SATRIM

Author

Listed:
  • Oğuz ATUK

    (Türkiye Cumhuriyet Merkez Bankası)

  • Mustafa Utku ÖZMEN

    (Türkiye Cumhuriyet Merkez Bankası)

Abstract

Policymakers are interested in the general trend of inflation. Headline inflation is subject to different shocks and contains noise due to the heterogeneity inherit in it. Therefore, core inflation measures, which are better capable of indicating general trend, are developed. Atuk and Özmen (2009) introduced and discussed various core inflation measures for Turkey. Among various measures discussed, trimmed mean inflation –TRIM– performs relatively better. However, this measure fails to distinguish signal and noise when dealing with seasonal items. To overcome this drawback, this study introduces a new core inflation measure SATRIM–seasonally adjusted trimmed mean inflation. This methodology seasonally adjusts disaggregated price series and uses seasonally adjusted monthly figures in trimming process. Overall, SATRIM outperforms TRIM measure on the basis of trend tracking ability in different time spans. Moreover, SATRIM, which is dynamic in nature, is more careful when dealing with seasonal items, focusing on non-seasonal extreme changes.

Suggested Citation

  • Oğuz ATUK & Mustafa Utku ÖZMEN, 2009. "A new approach to measuring core inflation for Turkey: SATRIM," Iktisat Isletme ve Finans, Bilgesel Yayincilik, vol. 24(285), pages 73-88.
  • Handle: RePEc:iif:iifjrn:v:24:y:2009:i:285:p:73-88
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    Citations

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    Cited by:

    1. Tamer Kulaksizoglu, 2016. "Measuring the Turkish core inflation with a shifting mean model," Empirical Economics, Springer, vol. 51(1), pages 57-70, August.
    2. Oguz Atuk & M. Utku Ozmen & Necati Tekatli, 2011. "Cekirdek Enflasyon Gostergelerinin Kullanimi Uzerine Bir Degerlendirme," CBT Research Notes in Economics 1101, Research and Monetary Policy Department, Central Bank of the Republic of Turkey.
    3. Kulaksizoglu, Tamer, 2015. "Measuring the Core Inflation in Turkey with the SM-AR Model," MPRA Paper 62653, University Library of Munich, Germany.

    More about this item

    Keywords

    Core inflation; trimmed mean; seasonality; Turkey;

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation

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