Forecasting Food Inflation in Developing Countries with Inflation Targeting Regimes

Developing countries that employ inflation-targeting monetary policy regimes require accurate short-run food inflation forecasts. We develop a systematic approach to improve food inflation forecasts, apply it to Colombian monthly data from December 1989 to April 2006, and show its relevance for infl...

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Bibliographic Details
Published in:American journal of agricultural economics 2012, Vol.94 (1), p.153-173
Main Authors: Gómez, Miguel I, González, Eliana R, Melo, Luis F
Format: Article
Language:English
Subjects:
Agricultural economics
Central banks
Colombia
Data analysis
Developing countries
Econometric models
Econometrics
Economic forecasting models
Economic forecasts
Employment forecasting
Food
Food Inflation
Food prices
Food products
Forecast Combination
Forecasting models
Inflation
Inflation rates
Inflation Targeting
LDCs
least squares
Modeling
Monetary policy
Statistical forecasts
Studies
Time series forecasting
Transmission mechanism
Univariate Time Series
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Summary:Developing countries that employ inflation-targeting monetary policy regimes require accurate short-run food inflation forecasts. We develop a systematic approach to improve food inflation forecasts, apply it to Colombian monthly data from December 1989 to April 2006, and show its relevance for inflation targeting regimes. Forecast accuracy can be improved by: disaggregating food products into away-from-home, processed and fresh foods; employing econometric methods to combine forecasts from individual models; and using flexible least squares methods in the presence of structural changes. We also show the importance of accurate food inflation forecasts in models simulating monetary policy transmission. AMS Subject Classification ,,
ISSN:0002-9092
1467-8276
DOI:10.1093/ajae/aar122