The author constructs a measure of core inflation using a structural vector autoregression containing oil-price growth, output growth, and inflation. This macro-foundedʺ measure of inflation forecasts total inflation at least as well as other, atheoretical measures. -- Inflation and prices

Greater data availability has been coupled with developments in statistical theory and economic theory to allow more elaborate and complicated models to be entertained. These include factor models, DSGE models, restricted vector autoregressions, and non-linear models.