Comparison of Measures of Core Inflation

Download or read book Comparison of Measures of Core Inflation written by Robert Rich and published by DIANE Publishing. This book was released on 2008-04 with total page 520 pages. Available in PDF, EPUB and Kindle. Book excerpt: The ability of central banks to differentiate between permanent & transitory price movements is critical for the conduct of monetary policy. The importance of gauging the persistence of price changes has led to the development of measures of underlying, or ¿core,¿ inflation that are designed to remove transitory price changes from aggregate inflation data. This article examines several proposed measures of core inflation -- the ex food & energy series, an ex energy series, a weighted median series, & an exponentially smoothed series -- to identify a ¿best¿ measure. Evaluates the measures¿ performance according to criteria such as ease of design, & accuracy in tracking trend inflation. Charts & tables.