Thomas Hasenzagl, Filippo Pellegrino, Lucrezia Reichlin, Giovanni Ricco, 16 October 2019

What is happening to inflation and output in the euro area? The ECB has apparently lost the ability to raise inflation and price expectations have been sliding since the last recession. Much of the policy debate has focused on the flattening of the Phillips curve. Yet, as this column shows, estimations of the joint output-inflation process point to a decline of both output potential and trend inflation as the most relevant elements of the puzzle. 

Pablo Pincheira, Jorge Selaive, Jose Luis Nolazco, 15 February 2016

One thing economists can agree on is that inflation is hard to forecast. This column argues that in this context, the idea that ‘core inflation’ may be a useful predictor is very appealing, especially for central banks that need to know where inflation is heading. Evaluating the ability of core to forecast headline inflation for OECD and some non-OECD countries, it seems that sizable predictability emerges for a very small subset of countries, but it is either subtle or undetectable for most other economies.

Michele Lenza, Lucrezia Reichlin, 24 June 2011

Should central banks use the headline or the core measure measure of inflation to track medium-term inflationary pressures? Lorenzo Bini Smaghi, board member of the ECB, recently argued in favour of using headline inflation. This provoked strong opposition from Paul Krugman, amongst others. This column assesses the two sides of the debate.

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