Sinclair, Tara M.; Jensen, Dennis W.; Bradley, Michael D. - Institute for International Economic Policy (IIEP), … - 2009
We decompose core CPI and the food and energy CPI measures into permanent and transitory components using a correlated … unobserved components model, to examine the behavior of core CPI when subject to shocks and to examine the claim that core CPI … captures the persistent part of headline CPI. We find that the permanent component of core CPI is more volatile than core CPI …