A New Approach to Construct Core Inflation

Sartaj Rasool Rather (), S. Raja Sethu Durai () and M Ramachandran ()
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S. Raja Sethu Durai: Department of Economics, Pondicherry University, Puducherry

Working Papers from Madras School of Economics,Chennai,India

Abstract: We propose a new methodology to construct core inflation which is, unlike other conventional methods, not based on ad hoc elimination/trimming of prices. The underlying inflation derived from our method is found to be a powerful leading indicator of headline inflation while other conventional measures do not seem to reflect such fundamental property of core inflation.

Keywords: Core inflation; Skewness; Leading indicator (search for similar items in EconPapers)
JEL-codes: C43 E31 E52 (search for similar items in EconPapers)
Pages: 17 pages
Date: 2014-09
New Economics Papers: this item is included in nep-cba, nep-mac and nep-mon
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Persistent link: https://EconPapers.repec.org/RePEc:mad:wpaper:2014-091

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