Home About Latest Browse RSS Advanced Search

Federal Reserve Bank of Atlanta
FRB Atlanta Working Paper
Trimmed-Mean Inflation Statistics: Just Hit the One in the Middle
Brent Meyer
Guhan Venkatu
Abstract

This paper reinvestigates the performance of trimmed-mean inflation measures some 20 years since their inception, asking whether there is a particular trimmed-mean measure that dominates the median consumer price index (CPI). Unlike previous research, we evaluate the performance of symmetric and asymmetric trimmed means using a well known equality of prediction test. We find that there is a large swath of trimmed means that have statistically indistinguishable performance. Also, although the swath of statistically similar trims changes slightly over different sample periods, it always includes the median CPI - an extreme trim that holds conceptual and computational advantages. We conclude with a simple forecasting exercise that highlights the advantage of the median CPI (and trimmed-mean estimators in general) relative to other standard measures in forecasting headline inflation.


Download Full text
Cite this item
Brent Meyer & Guhan Venkatu, Trimmed-Mean Inflation Statistics: Just Hit the One in the Middle, Federal Reserve Bank of Atlanta, FRB Atlanta Working Paper 2014-3, 01 Mar 2014.
More from this series
JEL Classification:
Subject headings:
Keywords: inflation; inflation forecasting; trimmed-mean estimators
For corrections, contact Elaine Clokey ()
Fed-in-Print is the central catalog of publications within the Federal Reserve System. It is managed and hosted by the Economic Research Division, Federal Reserve Bank of St. Louis.

Privacy Legal