Working Paper

Two Measures of Core Inflation: A Comparison

Abstract: Trimmed-mean Personal Consumption Expenditure (PCE) inflation does not clearly dominate ex-food-and-energy PCE inflation in real-time forecasting of headline PCE inflation. However, trimmed-mean inflation is the superior communications and policy tool because it is a less-biased real-time estimator of headline inflation and because it more successfully filters out headline inflation?s transitory variation, leaving only cyclical and trend components.

Keywords: inflation; trimmed mean; labor market slack; real-time data; ;

JEL Classification: E31; E37; E52;

Access Documents

File(s): File format is application/pdf
Description: Full text


Bibliographic Information

Provider: Federal Reserve Bank of Dallas

Part of Series: Working Papers

Publication Date: 2019-02-25

Number: 1903

Pages: 20 pages