Measures of Underlying Inflation in Sri Lanka

Author/Editor: Gupta, Souvik ; Saxegaard, Magnus
Publication Date: August 01, 2009
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate
Summary: During the first half of 2008, Sri Lanka witnessed significantly higher inflation than most other emerging Asian countries. Inflation has since declined amid declining world commodity prices and tight monetary policy. Given the sensitivity to global commodity prices, a core inflation measure could be useful for monetary policy. The purpose of this paper is to compare the performance of Sri Lanka's existing official measure of core inflation against alternative measures. Our findings suggest that the existing measure does contain information about the future path of headline information, but may be inadequate as a communication tool for the Central Bank.
Series: Working Paper No. 09/167
Subject(s): Central bank policy | Consumer price indexes | Economic models | Inflation | Monetary policy | Performance indicators | Price structures | Sri Lanka

Author's Keyword(s): Core Inflation | Sri Lanka | Monetary Policy
Publication Date: August 01, 2009
Format: Paper
Stock No: WPIEA2009167 Pages: 21
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