Alternative Measures of Core Inflation in Chile
Inflation targeting central banks usually base their objectives on headline inflation, which is often affected by price movements of specific components whose behavior makes it difficult to extract clear signals about the inflationary outlook relevant for the monetary policy horizon. For this reason, several measures of underlying (core) inflation have been proposed with the purpose of removing this “noise”. This paper presents some alternatives calculated for the Chilean economy: three different measures that trim CPI components according to criteria of price changes and volatility, and two measures that re-weight the components according to historical volatility. In general terms, we find that the measures trimming away items with extreme price changes or high volatility are informative about the inflationary outlook given that they are unbiased with respect to the seasonally adjusted CPI and superior to other measures in tracking the headline inflation trend.
|Date of creation:||May 2008|
|Contact details of provider:|| Postal: Casilla No967, Santiago|
Phone: (562) 670 2000
Fax: (562) 698 4847
Web page: http://www.bcentral.cl/
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Mick Silver, 2006. "Core Inflation Measures and Statistical Issues in Choosing Among Them," IMF Working Papers 06/97, International Monetary Fund.
- Juan-Luis Vega & Mark A. Wynne, 2003.
"A First Assessment of Some Measures of Core Inflation for the Euro Area,"
German Economic Review,
Verein für Socialpolitik, vol. 4, pages 269-306, 08.
- Vega, Juan-Luis & Wynne, Mark A., 2002. "A first assessment of some measures of core inflation for the euro area," Working Papers 0205, Federal Reserve Bank of Dallas.
- Michael Pedersen, 2009. "An Alternative Core Inflation Measure," German Economic Review, Verein für Socialpolitik, vol. 10, pages 139-164, 05.
- Michael Pedersen, 2006. "An Alternative Measure of Core Inflation," Working Papers Central Bank of Chile 366, Central Bank of Chile.
- Hodrick, Robert J & Prescott, Edward C, 1997. "Postwar U.S. Business Cycles: An Empirical Investigation," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 29(1), pages 1-16, February.
- Robert J. Hodrick & Edward Prescott, 1981. "Post-War U.S. Business Cycles: An Empirical Investigation," Discussion Papers 451, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
- Diebold, Francis X & Mariano, Roberto S, 2002. "Comparing Predictive Accuracy," Journal of Business & Economic Statistics, American Statistical Association, vol. 20(1), pages 134-144, January.
- Diebold, Francis X & Mariano, Roberto S, 1995. "Comparing Predictive Accuracy," Journal of Business & Economic Statistics, American Statistical Association, vol. 13(3), pages 253-263, July.
- Francis X. Diebold & Robert S. Mariano, 1994. "Comparing Predictive Accuracy," NBER Technical Working Papers 0169, National Bureau of Economic Research, Inc.
- Michael F. Bryan & Stephen G. Cecchetti, 1994. "Measuring Core Inflation," NBER Chapters,in: Monetary Policy, pages 195-219 National Bureau of Economic Research, Inc.
- Michael F. Bryan & Stephen G. Cecchetti, 1993. "Measuring Core Inflation," NBER Working Papers 4303, National Bureau of Economic Research, Inc.
- M. Carolina Grünwald N. & Enrique Orellana C., 2004. "Medidas Alternativas de Inflación Subyacente," Notas de Investigación Journal Economía Chilena (The Chilean Economy), Central Bank of Chile, vol. 7(1), pages 93-101, April. Full references (including those not matched with items on IDEAS)
When requesting a correction, please mention this item's handle: RePEc:chb:bcchwp:471. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Claudio Sepulveda)
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.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with 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 profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.