In this paper we study the effects of quality change on the price index for new passenger cars in Portugal for the years 1997-2001. Hedonic regression models are studied, giving particular emphasis to the relation between the form of the price index and the specification of the hedonic equation...

This paper proposes testable conditions that core inflation measures should satisfy. Trend inflation indicators calculated by Banco de Portugal are tested against this background. The major conclusion is that the so-called “underlying inflation”, the “10% trimmed mean”, and the “25%...

This paper assesses the usefulness of the commonly used underlying inflation indicator, in light of the criteria proposed in Marques et al. (2000). Empirical evidence for a group of six countries strongly suggets that the use of underlying inflation as an indicator of trend inflation should be...

In this paper, we propose a quantitative measure for inflation expectations based on consumer survey data. Thereafter, we proceed to testing the rationality assumption. This issue is of noteworthy interest in its own as it is commonly assumed in the theoretical modelling literature that the...

This paper investigates if the (OLS-scaled) first principal component (PC1), extracted from standardized yearly rates of change of basic items of the CPI, represents a reasonable option for a core inflation indicator. The evaluation is carried out by (i) confronting alternative linear...

The aim of this paper is to assess inflation forecasting acurracy over the short-term horizon using Consumer Price Index (CPI) disaggregated data. That is, aggregating forecasts is compared with aggregate forecasting. In particular, three questions are addressed: i) one should bottom-up or not,...

This paper discusses the use of the trimmed mean as a core inflation indicator when the price changes distribution is fat tailed and asymmetric and computes several asymmetric trimmed means that meet all the conditions suggested in Marques et al. (2000). It turns out that the 10 per cent trimmed...

This paper investigates the consequences of non-stationarity for the principal components analysis and suggests a data transformation that allows obtaining smoother series for the first principal component to be used as a core inflation indicator. The paper also introduces a theoretical model,...

This article takes the set of Portuguese markets and computes a new competition measure suggested by Boone (2008), which draws on the concept of profit elasticity to marginal costs in a given market. The article concludes that the majority of markets presented a reduction in competition in the...

We analyze the longevity of foreign entrants explicitly considering two possible ways of exit: firm closure and capital divestiture. We find that entry and post-entry strategies affect the longevity of firms and of foreign equity holdings, but in different manners. While the ownership...