An Alternative Core Inflation Measure

Michael Pedersen

German Economic Review, 2009, vol. 10, issue 2, 139-164

Abstract: We combine the ideas of the trimmed mean and the Edgeworth index to construct an alternative measure of core inflation named ‘Trim of Most Volatile Components (TMVC)’. At each point of time, this measure trims away the components of the price index that have been most volatile in the recent past. Statistical tests indicate that neither the trimmed mean nor the Edgeworth index dominates the TMVC in terms of tracking trend inflation.

Keywords: Core inflation; trimmed mean; Edgeworth index; TMVC (search for similar items in EconPapers)
Date: 2009
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DOI: 10.1111/j.1468-0475.2008.00453.x

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