Intertemporal Consumption and the Measurement of Inflation: A Dynamic Inertial Price Index

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Main author: Fiaschetti, Maurizio
Other authors: Marini, Giancarlo
Scaramozzino, Pasquale
Format: Monographs and Working Papers           
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id eprints-26371
recordtype eprints
institution SOAS, University of London
collection SOAS Research Online
language English
language_search English
topic HA Statistics
HB Economic Theory
description This paper develops a new price index (DIPI) and discusses its characteristics and dynamics. By allowing for habit formation and inertia, our model extends typical dynamic indexes that have a forward looking component, thus providing a more effective support for the design of policy measures. We calculate the DIPI for a sample of goods for the US and prove its effectiveness in tracking business cycle, thus resulting in a more reliable indicator for the design of policy measures. Comparison with the official inflation measure matches the results of the Boskin Commission, which argues that CPI overestimates inflation.
format Monographs and Working Papers
author Fiaschetti, Maurizio
author_facet Fiaschetti, Maurizio
Marini, Giancarlo
Scaramozzino, Pasquale
authorStr Fiaschetti, Maurizio
author_letter Fiaschetti, Maurizio
author2 Marini, Giancarlo
Scaramozzino, Pasquale
author2Str Marini, Giancarlo
Scaramozzino, Pasquale
title Intertemporal Consumption and the Measurement of Inflation: A Dynamic Inertial Price Index
publisher Centre for Financial and Management Studies (CeFIMS)
publishDate 2018
url https://eprints.soas.ac.uk/26371/

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