Two Measures of Core Inflation: A Comparison

Dolmas, Jim; Koenig, Evan F.

doi:10.24149/wp1903

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;

https://doi.org/10.24149/wp1903