Keeping these trade-offs in mind, we employ the method employed by Ciccarelli and Mojon (2010) to construct a measure of global inflation. We extract the first principal component of the quarter-on-quarter growth rate in seasonally adjusted real GDP across a sample of 46 economies. 2 This methodology requires a balanced panel, which restricts the sample to the period from the first quarter of 1998 to the last quarter for which data are available for all economies, the third quarter of 2010. The component of real GDP growth for a particular economy that is not explained by this first principal component is.
