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Evaluating Core Inflation Indicators

Carlos Marques (), Pedro Duarte Neves and Luís Morais Sarmento

Working Papers from Banco de Portugal, Economics and Research Department

Abstract: This paper proposes testable conditions that core inflation measures should satisfy. Trend inflation indicators calculated by Banco de Portugal are tested against this background. The major conclusion is that the so-called “underlying inflation”, the “10% trimmed mean”, and the “25% trimmed mean” do not meet the proposed conditions. However, they are satisfied by the “37-month centred moving average”, the “first principal component” and the “standard deviation weighted CPI” indicators. Yet, only the last two indicators can be used as useful core inflation measures, as the first one is not computable in real time.

JEL-codes: C43 E31 E52 (search for similar items in EconPapers)
Date: 2000
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Related works:
Journal Article: Evaluating core inflation indicators (2003) Downloads
Journal Article: Evaluating core inflation indicators (1999) Downloads
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Persistent link: https://EconPapers.repec.org/RePEc:ptu:wpaper:w200003

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