Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/95693
Year of Publication: 
2013
Series/Report no.: 
Bank of Canada Working Paper No. 2013-35
Publisher: 
Bank of Canada, Ottawa
Abstract: 
In this paper, the authors propose a measure of underlying inflation for Canada obtained from estimating a monthly factor model on individual components of the CPI. This measure, labelled the common component of CPI, has intuitive appeal and a number of interesting features. In particular, it is not affected by sector-specific price movements that can distort the signal in many other measures of underlying inflation, and appears to capture price movements that are indicative of aggregate demand fluctuations in the Canadian economy. This indicator may serve as a useful complement to existing measures of underlying inflation monitored by the Bank of Canada.
Subjects: 
Econometric and statistical methods
Inflation and prices
Business fluctuations and cycles
Monetary policy framework
JEL: 
C1
E31
E32
E52
E58
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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