Work

Measuring Core Inflation

Year: 1995

Type: article

Abstract: In this paper we argue that measured (RPI) inflation is conceptually mismatched with core inflation: the difference is more than just "measurement error". We propose a technique for measuring core inflation, based on an explicit long-run economic hypothesis. Core inflation is defined as that component of measured inflation that has no (medium-to) long-run impact on real output - a notion that is consistent with the vertical long-run Phillips curve interpretation of the co-movement in inflation and output. We construct a measure of core inflation by placing dynamic restrictions on a vector autoregression (VAR) system.

Source: The Economic Journal

DOI: 10.2307/2235408

Authors: Danny Quah, Shaun P. Vahey

Institutions: Bank of England, London School of Economics and Political Science

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W2159254294

FWCI: 16.48

Cites: 13

Cited by: 342

Related to: 10