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Setting the Operational Framework for Producing Inflation Forecasts

Author

Listed:
  • Jorge Canales-Kriljenko
  • Turgut Kisinbay
  • Rodolfo Maino
  • Eric Parrado

Abstract

How should a central bank organize itself to produce the best possible inflation forecast? This paper discusses elements for building a comprehensive platform for an inflation forecasting framework. It describes the exercise of forecasting inflation as a production process, which induces a strict discipline concerning data management and collection, the use of a suitable statistical apparatus, and the exercise of sound communication strategies to reinforce reputation and credibility. The efficient organization of the central bank becomes critical in producing relevant macroeconomic forecasts, with special consideration to product design, the essential requirements needed in the forecasting process, and key related organizational issues. In addition, the paper proposes to factor the authorities’ policy responses into inflation forecasts to ensure consistency with the spirit of the inflation targeting framework.

Suggested Citation

  • Jorge Canales-Kriljenko & Turgut Kisinbay & Rodolfo Maino & Eric Parrado, 2006. "Setting the Operational Framework for Producing Inflation Forecasts," Working Papers Central Bank of Chile 362, Central Bank of Chile.
  • Handle: RePEc:chb:bcchwp:362
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    References listed on IDEAS

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    Cited by:

    1. Jorge Iván Canales-Kriljenko & Luis I. Jácome H. & Ali Alichi & Ivan Luis de Oliveira Lima, 2011. "Sorteando la tormenta mundial: beneficios de la reforma de política monetaria en cinco países latinoamericanos," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(4), pages 194-226, Octubre-d.
    2. Douglas Laxton & Andrew Berg & Philippe D Karam, 2006. "A Practical Model-Based Approach to Monetary Policy Analysis—Overview," IMF Working Papers 06/80, International Monetary Fund.
    3. International Monetary Fund, 2010. "Weathering the Global Storm; The Benefits of Monetary Policy Reform in the LA5 Countries," IMF Working Papers 10/292, International Monetary Fund.
    4. Héctor Cuasquer & René Maldonado, 2011. "Microfinanzas y microcrédito en Latinoamérica," Boletín, Centro de Estudios Monetarios Latinoamericanos, vol. 0(4), pages 179-193, Octubre-d.
    5. Marcel Peter & Scott Roger & Geoffrey M Heenan, 2006. "Implementing Inflation Targeting; Institutional Arrangements, Target Design, and Communications," IMF Working Papers 06/278, International Monetary Fund.

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