Common Trends in the Consumer Price Index

This paper analyzes the long-term behavior of the components that make up the consumer price index of Peru (Lima), using the factor model proposed in Phillips and Sul (Econometrica, 75 (6), 2007). We identified four common trends: high inflation, two intermediate inflation and low inflation. This analysis allows to better understand the properties of good measures of long-run trend inflation. (Audio: Department of Economic Publications)