Quah, Danny and Vahey, Shaun P. (1995) Measuring core inflation. Economic journal, 105 (432). pp. 1130-1144. ISSN 0013-0133
Abstract
In this paper, we argue that measured (RPI) inflation is conceptually mismatched with core inflation: the difference is more than just ‘measurement error’. We propose a technique for measuring core inflation, based on an explicit long-run economic hypothesis. Core inflation is defined as that component of measured inflation that has no (medium-to) long-run impact on real output - a notion that is consistent with the vertical long-run Phillips curve interpretation of the comovements in inflation and output. We construct a measure of core inflation by placing dynamic restrictions on a vector autoregression (VAR) system.
| Item Type: | Article |
|---|---|
| Additional Information: | © 1995 Royal Economic Society |
| Library of Congress subject classification: | H Social Sciences > HB Economic Theory |
| Journal of Economic Literature Classification System: | E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level; Inflation; Deflation |
| Sets: | Departments > Economics Research centres and groups > LSE IDEAS Collections > Economists Online Research centres and groups > Centre for the Study of Human Rights |
| Rights: | http://www.lse.ac.uk/library/rights/LSERO.htm |
| URL: | http://eprints.lse.ac.uk/1141/ |
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