tag:blogger.com,1999:blog-5404820640426099135.post1806418482108098447..comments2023-10-31T00:46:35.316+13:00Comments on Anti-Dismal: Inflation and the RBNZPaul Walkerhttp://www.blogger.com/profile/13731003529546075700noreply@blogger.comBlogger1125tag:blogger.com,1999:blog-5404820640426099135.post-85183011973203928332008-03-04T23:19:00.000+13:002008-03-04T23:19:00.000+13:00I do not have data on CPI and its components for N...I do not have data on CPI and its components for NZ, but I studied this problem for the USA. <BR/>One can easily understand and control mid- and long-term changes in relative prices of goods and services. The reason for that is that we observe linear trends in the differences between CPI itself and its various components such as housing, food, energy, transportation, education, medcare, etc. So to say, the differnce between core CPI and headline CPI in the USA is described by the following function<BR/>diff=core CPI-CPI= -1.55*t+3118, where t is time (calendar year) with the goodness-of-fit R**2=0.9<BR/><BR/>Therefore, relative prices, i.e. deviations of individual prices from overall CPI, you are discussing are linear finctions of time only. Fluctuations around the trends are canceled out at very short time as you can see from the figures in my posts:<BR/> http://inflationusa.blogspot.com/search/label/core%20CPI<BR/><BR/>Thus, the problem is only in description of the CPI evolution over time, not its components.Anonymousnoreply@blogger.com