6 In applied econometrics typically alternative specifications are initially tried, and the specification, estimation and testing steps are re-iterated a number of times. 7 In this way, a ‘good’ forecasting model is obtained by an extensive specification search.
Much of the recent larger gap is due to differences in the coverage of healthcare services and to differences in the weight accorded to housing services and health-care services. The CPI only covers out-of-pocket expenditures for health-care services, while the PCE index covers a much broader range of spending.