Alternative Measures of Core Inflation in
Romania
by
Pelinescu,
Elena and Dospinescu, Andrei Silviu
Published in Romanian Journal of Economic Forecasting, 2008, volume 9
issue 1, 134-148
Abstract
The paper intends to present synthetically the main approaches to computing core
inflation, taking into consideration the importance of core inflation for
conducting monetary policy. At the same time, the paper computes different
measures of core inflation using methods based on excluding certain categories
of prices from overall inflation rate and methods based on excluding from the
overall inflation rate temporary movements of various prices which at different
moments register extremely high volatility (using trimmed methodology). For the
monetary policies it is important to select the inflation indicator with the
lowest volatility. In this respect, the paper analyzes the efficiency of the
computed core inflation indicators using a statistical approach. At the same
time, the paper analyzes the usefulness of core indicators for monetary policy
measures.
Keywords:
core inflation, price stability, methods of computation
JEL Classification:
E31, E37, C53, P22
