To trim or not to trim? An application of a trimmed mean inflation estimator to the United Kingdom

Working papers set out research in progress by our staff, with the aim of encouraging comments and debate.
Published on 23 July 1999

Working paper No. 97
By Hasan Bakhshi and Tony Yates

Although the target of monetary policy is clear, there have been suggestions that the conduct of monetary policy is improved by monitoring ‘trimmed mean’ inflation rates, the mean of some central portion of the distribution of price changes. This paper assesses critically the theoretical and empirical arguments for trimming, and applies Bryan et al’s (1997) concept of the ‘optimal trim’ to the United Kingdom.

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