Summary:
I ran across some silly commentary about inflation that did not take into account base effects. I just want to explain how to avoid this problem using elementary results from systems theory. The short version is to use a first order low pass filter, which economists vaguely label an "exponential moving average" (or something like that). Since it was used to generate "adaptive expectations," I strangely labelled it "adaptive average" in the above figure.Bond EconomicsA Rant About Base EffectsBrian Romanchuk
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
I ran across some silly commentary about inflation that did not take into account base effects. I just want to explain how to avoid this problem using elementary results from systems theory. The short version is to use a first order low pass filter, which economists vaguely label an "exponential moving average" (or something like that). Since it was used to generate "adaptive expectations," I strangely labelled it "adaptive average" in the above figure.Bond EconomicsA Rant About Base EffectsBrian Romanchuk
Topics:
Mike Norman considers the following as important:
This could be interesting, too:
Lars Pålsson Syll writes When usefulness is more important than precision
Bill Haskell writes The Plan to destroy Obamacare
NewDealdemocrat writes The ISM services index, measuring 75% of the economy, sounds an ‘all clear’ – for now, anyway
Joel Eissenberg writes High fructose corn syrup and your health
I ran across some silly commentary about inflation that did not take into account base effects. I just want to explain how to avoid this problem using elementary results from systems theory. The short version is to use a first order low pass filter, which economists vaguely label an "exponential moving average" (or something like that). Since it was used to generate "adaptive expectations," I strangely labelled it "adaptive average" in the above figure.Bond Economics
A Rant About Base Effects
Brian Romanchuk