Measuring Core Inflation in Romania Using the Dobrescu Method A Comparative Approach

by Dospinescu, Andrei Silviu
Published in Romanian Journal of Economic Forecasting
, 2010, volume 13 issue 2, 308-319

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Abstract

The paper focuses on the persistent and non-persistent changes in relative prices and their relation with the volatility of the aggregated price index. From the methodological perspective, the paper analyzes the implications of the hypotheses of five main methods for calculating core inflation with respect to the persistent and non-persistent changes in relative prices. From the empirical perspective, the paper ranks the methods based on volatility and discusses the relation between volatility and the persistent and non-persistent changes in relative prices, focusing on the relation between the changes in the components of the CPI that tend to be irreversible and the CPI. In the context of the analysis, the main conclusion of the paper indicates that there is a long-term tendency of the CPI, which is reflected by the irreversible changes in relative prices

Keywords: core inflation, relative prices, prices volatility, reversibility
JEL Classification:
E31, E37, C53, P22