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Media type:
E-Article
Title:
Underlying inflation and asymetric risks
Contributor:
Le Bihan, Hervé;
Leiva-León, Danilo;
Pacce, Matías
imprint:
Banco de España, 2023
Published in:Documentos de Trabajo
Language:
Not determined
DOI:
10.53479/30849
ISSN:
1579-8666
Origination:
Footnote:
Description:
<jats:p>We propose a new measure of underlying inflation that provides real-time information on asymmetric risks in the outlook for inflation. The asymmetries are generated by nonlinearities induced by economic activity. The new indicator is based on a multivariate regime-switching framework estimated using disaggregated sub-components of euro area HICP and has several additional advantages. First, it is able to swiftly infer abrupt changes in underlying inflation. Second, it helps track turning points in underlying inflation on a timely basis. Third, the proposed indicator also performs satisfactorily vis-à-vis several criteria relevant to inflation monitoring.</jats:p>