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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
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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:
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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