A first assessment of some measures of core inflation for the euro area by Juan Luis Vega

Cover of: A first assessment of some measures of core inflation for the euro area | Juan Luis Vega

Published by Federal Reserve Bank of Dallas in [Dallas, Tx.] .

Written in English

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Places:

  • European Union countries.

Subjects:

  • Inflation (Finance) -- European Union countries.

Edition Notes

Book details

StatementJuan-Luis Vega, Mark A. Wynne.
SeriesResearch Department working paper ;, 0205, Working paper (Federal Reserve Bank of Dallas. Research Dept. : Online) ;, 0205.
ContributionsWynne, Mark A.
Classifications
LC ClassificationsHB1
The Physical Object
FormatElectronic resource
ID Numbers
Open LibraryOL3476559M
LC Control Number2005616084

Download A first assessment of some measures of core inflation for the euro area

Core inflation plays an important role in the deliberations of monetary policy‐makers. In this paper we evaluate a number of measures of core inflation constructed using euro‐area data. In addition to the traditional exclusion‐type core measures, we examine two newer ones, documenting their properties and evaluating their performance in terms of their ability to track underlying or trend inflation in real Cited by: Core inflation plays an important role in the deliberations of monetary policy‐makers.

In this paper we evaluate a number of measures of core inflation constructed using euro‐area data. I A First Assessment of Some Measures of Core Inflation for the Euro Area - Vega - - German Economic Review - Wiley Online LibraryCited by: A First Assessment of Some Measures of Core Inflation for the Euro Area.

Core inflation plays an important role in the deliberations of monetary policymakers. In this paper we evaluate a number of measures of core inflation constructed using euro area data. BibTeX @MISC{Vega02afirst, author = {Juan-Luis Vega and Mark A.

Wynne}, title = { A First Assessment of Some Measures of Core Inflation for the Euro Area }, year = {}}. Core inflation plays an important role in the deliberations of monetary policymakers. In this paper we evaluate a number of measures of core inflation constructed using euro area data.

In addition to the traditional exclusion-type core measures, we examine two newer ones, documenting their properties and evaluating their performance in terms of their ability to track underlying or trend inflation in real.

The standard deviation, a crude measure of volatility, is generally significantly lower for the measures of underlying inflation than for the headline HICP inflation rate. The HICPX, HICPX excluding travel-related items, clothing and footwear, PCCI and Supercore measures tend to have comparatively low volatility (see Table 1).

"A First Assessment of Some Measures of Core Inflation for the Euro Area," German Economic Review, Verein für Socialpolitik, vol. 4, pagesAugust. Juan-Luis Vega & Mark A. Wynne, " A first assessment of some measures of core inflation for the euro area," Working PapersFederal Reserve Bank of : Edward N.

Gamber, Julie K. Smith. Measures of Underlying Inflation in the Euro Area: Assessment and Role for Informing Monetary Policy Prepared by Emil Stavrev Authorized for distribution by Jörg Decressin August Abstract This Working Paper should not be reported as representing the views of the IMF.

Unanticipated volatile prices. make us unable to make decisions. -caused by inflation. Measuring the changing purchasing power of the dollar, must construct a price index. Price Index. attempts to provide a measure of the prices paid for a certain bundle of goods and services over time.

2 ways to measure inflation. Core inflation in the euro area in this paper is measured by means of the structural VAR approach. To our best knowledge, so far only Wehinger () has applied this approach to core inflation measurement in the euro area.1 The main goal of this paper is to assess the price trend in the euro area.

In addition we compare our measure of core. Inflation expectations in the euro area: a review of recent developments are formed, focusing in particular on how measures at different horizons respond to different information.

The article also refl ects on the behaviour of the various available measures during the past three years, which have been challenging for monetary policy.

CES Working Papers – Volume VII, Issue 1 17 MEASURES OF CORE INFLATION USED BY THE NATIONAL BANK OF ROMANIA Ionut - Cristian BACIU* Abstract: The inflationary process has become a phenomenon that has a significant influence on society in general and it is therefore important to be managed in an efficient manner.

The paper evaluates the month ahead inflation forecasting performance of various indicators of underlying inflation and structural models. The inflation forecast errors resulting from model misspecification are larger than the errors resulting from forecasting of exogenous variables.

Also, measures derived using the generalized dynamic factor model (GDFM) overperform other measures Author: Emil Stavrev. Core consumer prices In the Euro Area increased percent in April of over the same month in the previous year.

Core Inflation Rate in the Euro Area averaged percent from untilreaching an all time high of percent in March of and a record low of percent in January of This page provides the latest reported value for - Euro Area Core Inflation Rate.

Request PDF | Inflation measurement and the ECB's pursuit of price stability: A first assessment | Defining price stability The Harmonized Index of Consumer Prices (HICP) is at the core of the. The baseline persistence-weighted core inflation measure and the two proposed variants are computed for the sample period from January to January The result for the baseline measure (taking the annual growth rate for illustration purposes) is reported in Fig.

2 by:   The deflator for personal consumption expenditure (PCE) is a comparable proxy for a cost of living index for both the EU and the euro area.

The PCE deflator is a measure of consumer price inflation computed as part of the national accounts, and so is available for all EU by: Core Inflation: A Review of Some Conceptual Issues Abstract: This paper reviews various approaches to the measurement of core inflation that have been proposed in recent years.

The objective is to determine whether the ECB should pay special attention to one or other of these measures in assessing inflation developments in the euro area.

core PCE​ deflator, which is the PCE deflator excluding food and fuel. The Fed has followed this​ instruction, as seen by the fact that the core inflation rate has remained within or close to the range of between 1 and 2 percent a year. A Core Inflation Indicator for the Euro Area This paper proposes a new core inflation indicator for the euro area, obtained by 'cleaning' monthly price changes from short-run volatility, idiosyncratic, and measurement errors.

We use a factor model to "project" monthly inflation on a large panel of time series. Exploiting multivariate information. The ECB’s measures of underlying inflation for the euro area. Christiane Nickel, Derry O'Brien 20 November Just like other central banks, the ECB generally monitors a range of measures of underlying inflation to help distinguish noise from signal in headline inflation.

Note: Covers the euro area countries that are members of the OECD. As a percentage of labour force. In the total economy.

Harmonised index of consumer prices excluding energy, food, drink and tobacco. Source: OECD Economic Outlook database. Euro area Size: KB. “A core inflation indicator for the euro area”, Journal of Money, Credit and Banking, Vol.

37 No. 3, Julypp. and Stavrev, E., “Measures of underlying inflation in the euro area: assessment and role for informing monetary policy”, Working Paper No.IMF,   Core inflation is the change in the costs of goods and services but does not include those from the food and energy sectors.

This measure of inflation Author: Will Kenton. evaluating the appropriate core inflation measure for singapore 9 5. re-examining the mas core inflation measure 11 6.

statistical tests of the core inflation measure 16 volatility 16 co-integrating relationship betweenFile Size: KB. Core Inflation in the Euro Area: An Application of the Generalized Dynamic Factor Model Elke Hahn∗ September Abstract: Since the second half of the nineties the euro area has been subject to a considerable accumulation of temporary and idiosyncratic price shocks.

Core inflation indicators for the euro area are thus of utmost interest. Methodology of calculating core inflation measures 4 Narodowy Bank Polski Methodology of calculating core inflation measures The history of publication of core inflation measures by Narodowy Bank Polski dates back to In this period, both the contents and the scope of the published measures have undergone changes.

At each point of time this measure trims away the components of the price index, which have been most volatile in the past. TMVC tracks trend inflation better than other core inflation measures in the euro zone, but in the US the evidence is weaker. Usage. The preferred measure by the Federal Reserve of core inflation in the United States is the change in the core personal consumption expenditures price index (PCE).

This index is based on a dynamic consumption basket. Economic variables adjusted by this price deflator are expressed in chained dollars, rather than the alternative constant-dollar measure based on a fixed goods' basket. Measuring Core Inflation lated from thirty-six components of the CPI over a sample beginning in Febru- ary and ending in December Section presents evidence as to whether our measures conform to a key implication of Ball and Mankiw’s view.

measures of core inflation, however, have limitations – consequently, there is merit in monitoring a set of measures. Moreover, core inflation measures are best viewed as complements to, rather than substitutes for, the thorough analysis of inflation and capacity Author: Mikael Khan, Louis Morel, Patrick Sabourin.

A New Measure of Core Inflation Tiff Macklem, Research Department • While the Bank of Canada’s inflation-control target is specified in terms of the rate of increase in the total consumer price index, operationally, the Bank uses a measure of trend or “core” inflation as a short-term guide for its monetary policy actions.

Eurozone core inflation fall raises prospect of ECB stimulus measures This article is more than 3 years old Underlying inflation in single currency area. The biggest drag on the overall index came from energy prices, which dropped % year-on-year.

Without the volatile energy and unprocessed food components – what the European Central Bank calls core inflation – prices grew % on the month for a % year-on-year increase. In March this measure was an increase of %. There are two main approaches to estimating core inflation.

One is the statistical method, which produces measures such as the weighted median. In general, the statistical approach exploits the cross-section properties of the component level inflation data. The other method is the theoretical approach. The annual rate of headline consumer price inflation has eased this year in the major advanced economies, helped by a downturn in energy price pressures.

Core inflation has remained broadly stable and below target in many economies, at around 1¾ per cent in the United States, 1% in the euro area and % in Japan. 1 Going forward, it is instructive to clarify some of the terminology in the analysis. We use the terms ‘traditional underlying inflation measures’, ‘core inflation measures’, and ‘exclusion based measures’ interchangeably (see section ), while the term ‘underlying inflation measure’ denotes an overarchingCited by: 4.

HICP. Harmonised indices of consumer prices (HICPs) are comparable measures of changes in consumer prices. They are compiled on the basis of harmonised rules and standards, in particular regarding the coverage of goods and services and the treatment of price observations.

Using quarterly euro area data from the period we apply different filters (Hodrick-Prescott, Baxter-King, wavelets) as empirical measures of core money. DEFINING PRICE STABILITY 4 4 price stability, everyone expected the ECB to put forward a quantitative definition of price stability.

And given the paucity of other comprehensive inflation measures for the euro area and the lags in the publication of the GDP-based price measures, it was not at all surprisingFile Size: KB. The Euro area is first (final CPI) – with the stronger Euro having some depressing impact on commodity prices.

US inflation is probably worth more attention. Core inflation is above its 20 year average. Most prices are rising faster than their long term averages. We should be wary about being seduced into complacency by lower oil prices.timeliness refers not only to when a measure is first available but also to the revisions that the measure may undergo as more data are added.

Thus, a good measure of core inflation would not be highly revised (Rogers ). Wynne () suggests six criteria for evaluating a measure of core inflation.

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