Journal of Economics and Development Studies

Is Core Inflation a Better Measure than Headline Inflation in Jordan?
Mohammed Al-Assaf, Mohammad Alawin

Abstract
The objective of this study is to compare the performance of headline inflation and core inflation in Jordan to determine which indicator interacts more with economic variables and which indicator is more sensitive to economic policies. This comparison will be done by measuring the extent of the impact of a number of economic variables on these two indexes. Estimation of the empirical models was done based on several econometric tests. The results show the presence of a long-run equilibrium relationship between both core inflation and headline inflation with economic variables. However, the results indicate that core inflation is superior interacting with economic variables. These results suggest policy makers should take movements of core inflation into consideration when considering economic policies.

Full Text: PDF     DOI: 10.15640/jeds.v6n3a2