Abstract
Tae-Hwy Lee and Stuart Scott (1996)
"Transmission of Producer Prices Through Stages of
Processing," Proceedings of the Section on Survey
Research, American Statistical Association.
An economy can be subdivided sequentially into several
stages, and producer price indexes (PPI) can be developed for
each stage. The U. S. Bureau of Labor Statistics has
developed two such formulations: one emphasizing the degree
of a product's fabrication and another the direction of
transactions among stages. Tracing the inflation transmission
in terms of timing, direction, and magnitude is then
possible. Inflation transmission is examined and compared in
the two PPI systems using vector error correction models
(VECM). The relationships between the long-run and short-run
factors are explored to learn the dynamic structure of each
price system. Forecasts of CPI inflation using the two PPI
systems are also evaluated.
Last Modified Date: July 19, 2008
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