Estimation and evaluation of core inflation measures |
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| Authors: | Abdul Aleem Amine Lahiani |
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| Affiliation: | 1. Centre d’économie de l’Université Paris Nord (CEPN), University of Paris XIII , 99 avenue Jean Baptiste Clément, 93430 Villetaneuse, France;2. ARQADE , Toulouse School of Economics, Toulouse, France aleem.abdul@univ-paris13.fr;4. LEO , Université d'Orléans, Rue de Blois, BP 267-39, 45067 Orléans cedex 2, France;5. ESC Rennes School of Business , Rennes, France |
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| Abstract: | This article estimates and evaluates different measures of core inflation for India by employing statistical and econometric approaches. We estimate Wholesale Price Index (WPI) ex-food, WPI ex-food and energy, 20% asymmetric trimmed mean, 63rd percentile and Structural Vector Autoregression (SVAR) measures of core inflation. The trimmed mean, 63rd percentile and SVAR measures are unbiased, less volatile and highly correlated to headline inflation. The predictive accuracy of the different core inflation measures used in this article is assessed. The overall result suggests that a 20% asymmetric trimmed mean and SVAR measures of core inflation can be useful for the policy purposes. |
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