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Stability Price Index, Core Inflation and Output Volatility

Wojciech Charemza and Imran Hussain Shah

No 12/21, Discussion Papers in Economics from Division of Economics, School of Business, University of Leicester

Abstract: This paper examines the relationship between the ‘exclusion’ type core inflation measures and the stability price index. Empirical results for Malaysia and Pakistan suggests that, if targeting core inflation index is to stabilize output, weights of the export-oriented sectors (energy for Malaysia and foodstuffs for Pakistan) should be reduces, in relation to the consumers’ price index weights, and for import-oriented sectors, increased. It also indicates that, in order to maintain real sector stability, central bankers should include the fundamental component of the stock market prices in the price index they target.

Keywords: Price Index; Monetary Policy; Output Stability; Financial Markets (search for similar items in EconPapers)
JEL-codes: E52 E58 G12 (search for similar items in EconPapers)
Date: 2012-10
New Economics Papers: this item is included in nep-mac, nep-mon and nep-sea
References: Add references at CitEc
Citations: View citations in EconPapers (1)

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Journal Article: Stability price index, core inflation and output volatility (2013) Downloads
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