IDEAS home Printed from https://ideas.repec.org/p/cbi/wpaper/3-rt-25.html
   My bibliography  Save this paper

Beyond Aggregates: A Dual Lens on Eurozone Trend Inflation

Author

Listed:
  • Aydin Yakut, Dilan

    (Central Bank of Ireland)

Abstract

This study investigates the dynamics of trend inflation for both the euro area (EA) countries and the aggregate rates of the EA. To this aim, trend inflation rates are estimated using various forms of a flexible unobserved components model, allowing for outliers and stochastic volatility. Using granular sector-level data for country-level applications provides a finer comparison between the member countries. Both models exploiting the sector and country levels are considered for the euro area to understand the underlying dynamics more thoroughly. In addition, alternative estimates for the euro area are obtained by combining country-level results. The results show that the use of multivariate models improves precision and outperforms the univariate models at longer horizons. A horse race between these estimates and the other popular measures from the literature, such as PCCI, supercore, etc., shows that no single metric outperforms the others. Therefore, it remains crucial to have various measures in the toolbox of policymakers as they complement each other.

Suggested Citation

  • Aydin Yakut, Dilan, 2025. "Beyond Aggregates: A Dual Lens on Eurozone Trend Inflation," Research Technical Papers 3/RT/25, Central Bank of Ireland.
    • Handle: RePEc:cbi:wpaper:3/rt/25
    as

    Download full text from publisher

    File URL: https://www.centralbank.ie/docs/default-source/publications/research-technical-papers/beyond-aggregates-dual-lens-on-eurozone-trend-inflation.pdf?sfvrsn=883b6b1a_7
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions; Dynamic Treatment Effect Models; Diffusion Processes; State Space Models
    • C11 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Bayesian Analysis: General

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cbi:wpaper:3/rt/25. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Fiona Farrelly (email available below). General contact details of provider: https://edirc.repec.org/data/cbigvie.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.