Quah, Danny and Vahey, Shaun P (1995) Measuring core inflation. Econometrics; EM/1995/282, EM/1995/282. Suntory and Toyota International Centres for Economics and Related Disciplines, London School of Economics and Political Science, London, UK.Full text not available from this repository.
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:||Monograph (Discussion Paper)|
|Additional Information:||© 1995 the authors|
|Library of Congress subject classification:||H Social Sciences > HB Economic Theory|
|Sets:||Collections > Economists Online
Research centres and groups > Centre for Economic Performance (CEP)
Departments > Economics
|Date Deposited:||27 Apr 2007|
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