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A Simple Framework to Monitor Inflation
This paper proposes a simple framework to help monitor and understand movements in PCE inﬂation in real time. The approach is to decompose inﬂation using simple categorical-level regressions or systems of equations. The estimates are then used to group categories into components of PCE inﬂation. I review some applications of the methodology, and show how it can help explain inﬂation dynamics over recent episodes. The methodology shows that inﬂation remained low in the mid-2010s primarily because of factors unrelated to aggregate economic conditions. I also apply the methodology to ...
Inflation targeting and revisions to inflation data: a case study with PCE inflation
Central banks around the world have come to recognize the importance of maintaining low and stable inflation. One widely employed tool for helping to do so is known as inflation targeting, whereby a central bank sets a numeric goal for inflation. Once this target is publicly stated, the bank can be held accountable for its actions in regard to meeting, or not meeting, this target. Countries that have adopted such a tool have generally had a favorable experience, and there is evidence that inflation targeting is correlated with increased stability in output growth, lower inflation, and more ...