Measuring trend inflation in India

Behera, Harendra

doi:10.1016/j.asieco.2022.101474

Cited by 3 publications

(4 citation statements)

References 40 publications

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“…Societally speaking, the current mechanism for constructing inflation indicator is problematic. This is not only the case in China but also in other economies (Behera & Patra, 2022;Arango-Castillo et al, 2023). The well-known Laspeyres index is calculated using consumption as a weight.…”

Section: Discussionmentioning

confidence: 99%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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China’s constantly rapid economic growth accompanying by a low overall inflation has long been mysterious in macroeconomics. The core purpose of this paper is to solve this puzzle. Therefore, we integrate overdetermined set of equations into a MUCSVO model to explore the volatility mechanism of the overall inflation from a sectoral perspective. Our key findings include: 1) the hedging effect of sectoral inflation fluctuations principally accounts for China’s long-run stable overall inflation; 2) the main contradiction of China’s inflation has been shifting from high price levels in the traditional food and residence categories to rising prices in the health care category; 3) as the proportions of inflation in the food and residence categories fall steadily, sectoral inflation weights become more evenly distributed. In conclusion, China’s overall inflation and deflation will be much less likely to occur, while inflation is still of sectoral imbalance. Unusual price fluctuations in the food and health care categories, which are highly relevant to basic living standards of the low-income group, deserve close attention in particular. Overall, besides solving the puzzle of China’s low inflation, our model is applicable to economies that do not publish inflation weights, which is a useful extension of core inflation measurement.

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Section: Discussionmentioning

confidence: 99%

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Liu,

Xu,

Song

et al. 2024

Technological and Economic Development of Economy

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“…Trend inflation is a critical indicator of core inflation, influenced by long-term structural factors such as inflation targets (Ireland, 2007;Garnier et al, 2015), the economic structure (Cogley et al, 2010), inflation expectations (Chan et al, 2018), and the demographics of the working-age population (Juselius and Takáts, 2018). Hence, trend inflation is defined as the level towards which inflation converges following the dissipation of transitory shocks (Behera and Patra, 2022), such as demand and supply shocks, and idiosyncratic changes in relative prices.…”

Section: Trendmentioning

confidence: 99%

Modeling the Trend, Persistence, and Volatility of Inflation in Pacific Alliance Countries: An Empirical Application Using a Model with Inflation Bands

Rodríguez,

Surco

2024

Documento De Trabajo

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Este artículo estima y analiza la dinámica de inflación tendencial, así como la persistencia y volatilidad de la brecha inflacionaria en los países de la Alianza del Pacífico (Chile, Colombia, México y Perú). Para ello, el enfoque econométrico se basa en las metodologías propuestas por Stock y Watson (2007) y Chan et al. (2013). Entre ellos, el modelo AR-Trend-Bound considera las implicaciones de las metas de inflación al estimar los componentes no observados de la inflación. Los resultados indican que este modelo efectivamente asigna la mayor parte del componente permanente a la inflación tendencial. Además, en los cuatro países se observa una tendencia decreciente de la inflación en la década de 1990, una estabilización en las dos primeras décadas del siglo XXI y una tendencia creciente de la inflación tras el inicio de la pandemia de COVID-19. Los bajos niveles de persistencia de la brecha de inflación antes de la pandemia reflejan la eficacia de los bancos centrales para mantener la inflación cerca de su nivel tendencial. Finalmente, la volatilidad de la brecha de inflación identifica la “Gran Moderación” de la inflación, con aumentos de la volatilidad durante la pandemia alcanzando niveles similares a los estimados en los años noventa.

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“…More recent studies that applied Markov-switching models to examine the trend of inflation include Bojanic 22 and Behera and Patra. 24 Besides, the second strand of nonlinear regression models is applied to examine the asymmetric effect of oil price changes. For this purpose, the nonlinear autoregressive distributed lags (NARDL) model is applied by decomposing the oil price data into two series, the oil price increases and decreases series.…”

Section: Literature Reviewmentioning

confidence: 99%

“…More recent studies that applied Markov-switching models to examine the trend of inflation include Bojanic 22 and Behera and Patra. 24…”

Section: Literature Reviewmentioning

confidence: 99%

A new look at asymmetric effect of oil price changes on inflation: Evidence from Malaysia

Sek

2022

Energy & Environment

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The existing literature that examined the effect of oil price on domestic price inflation only focused on consumer price at an aggregate level. The studies that focused on producer and production levels, and based on disaggregated data are very lack. Besides, previous studies also mainly applied the linear regression approach in studying the effect of oil price. This study seeks to explore the mentioned issues by focusing on sectoral consumer (CPI), industrial (IPI), and producer (PPI) prices of Malaysia. The Markov-switching (MS) regression technique is applied. The models are innovated by incorporating the asymmetric effects of oil price changes. The results reveal different reactions of sectoral domestic price inflation to oil price changes. The oil price has asymmetric effects on domestic price inflation with higher impacts on industrial and producer prices than the consumer price. The effect is larger in sectors that have higher linkages with oil/ energy resources. These sectors are oil-intensive and are sensitive to oil price changes. Among these sectors are the CPI transportation sector, IPI manufacturing, and electrical sectors as well as PPI fuel, chemicals, and manufacturing sectors. However, oil is not the main factor causes to domestic inflation. The main determinants of inflation are real exchange rate, aggregate supply, and demand. Besides, the policy decisions are also influential on price stability. The sectors of CPI transportation, PPI animals & vegetable oils, and PPI fuel have a high tendency to increase prices and should be well-monitored.

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Measuring trend inflation in India

Cited by 3 publications

References 40 publications

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Solving the Puzzle of China’s Low Inflation: A New Perspective From Sectoral Core Inflation Fluctuations

Modeling the Trend, Persistence, and Volatility of Inflation in Pacific Alliance Countries: An Empirical Application Using a Model with Inflation Bands

A new look at asymmetric effect of oil price changes on inflation: Evidence from Malaysia

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