1 Measures of inflation Go to the Dallas Fed webpage (www.dallasfed.org) and look for the Trimmed Mean PCE Inflation Rate data. 1. Download the historical series for the trimmed mean PCE inflation.

2. Go to the BLS website (bls.gov) and download historical series for CPI: All items in U.S. city average, all urban consumers, not seasonally adjusted.

3. Go to either FRED or the Bureau of Economic Analysis (bea.gov) and download series for PCE and PCE core (excluding food and energy).

4. For the CPI and PCE indices, create monthly (annualized) inflation rates. To review how to annualize monthly percentage changes, check out the handout available on CANVAS, "GrowthRatesandLogRules.pdf". This material was covered in our first lectures.

5. Plot the monthly annualized inflation rates for the trimmed-mean PCE, the CPI, the PCE and PCE core on the same graph, from January 1977 to the most recent available month. Label them carefully (you can use different markers as well) so that each series is distinguishable from the others.

6. Show a one-page report explaining: (i) what do these indices measure? (ii) how are they constructed? (iii) how does the trimmed-mean PCE differ from the two PCE indices produced by the BEA? You can find documentation on these differences in the related links section of the trimmed-mean PCE page at dallasfed.org