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Behavior of a New Median PCE Measure: A Tale of Tails

Daniel Carroll and Randal Verbrugge ()

Economic Commentary, 2019, issue July

Abstract: We introduce two new measures of trend inflation, a median PCE inflation rate and a median PCE excluding OER inflation rate, and investigate their performance. Our analysis indicates that both perform comparably to other simple trend inflation estimators such as the trimmed-mean PCE. Furthermore, we find that the performance of the median PCE is related to skewness in the distribution of cross-sectional growth rates across categories in the PCE, and our results suggest that the Bowley skewness statistic may be useful in forecasting.

Keywords: inflation; measurement (search for similar items in EconPapers)
Date: 2019
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DOI: 10.26509/frbc-ec-201910

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