Discussion Paper Details

Please find the details for DP1153 in an easy to copy and paste format below:

Full Details   |   Bibliographic Reference

Full Details

Title: Measuring Core Inflation

Author(s): Danny Quah

Publication Date: March 1995

Keyword(s): Core Inflation, Dynamic Restrictions and Vector Autoregression

Programme Area(s): International Macroeconomics

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 co-movements in inflation and output. We construct a measure of core inflation by placing dynamic restrictions on a vector autoregression (VAR) system.

For full details and related downloads, please visit:

Bibliographic Reference

Quah, D. 1995. 'Measuring Core Inflation'. London, Centre for Economic Policy Research.