# PICNIA: Inflation rate, personal consumption expenditures

## Changes to the FRB/US model

PICNIA: Inflation rate, personal consumption expenditures
Old model

    picnia - picnia_aerr = picxfe
     + ((ucfs + ucfs(-1))/2)*400*d(log(pcfr))
     + ((uces + uces(-1))/2)*400*d(log(pcer))

New model

    picnia - picnia_aerr = picxfe
     + y_picnia(1)*400*(log(pcer) - log(pcer(-1)))
     + y_picnia(2)*400*(log(pcfr) - log(pcfr(-1)))

## Details about the changes

- The new version of FRB/US uses constant shares for aggregation, which are represented as coefficients. The time-varying nominal shares used in the previous verson of FRB/US introduced non-linearities and dependencies on the initial conditions that possibly affected negatively the long-run and stochastic properties of the model.

- Consequently, the following variables have been eliminated from the model:

  - UCFS: Food share of nominal consumption expenditures.
  - UCES: Energy share of nominal consumption expenditures.