<p>You already accounted for multiplication by 4. Further multiplication by 100 to make the units of measurement percentage points? I.e. inflation is usually referred to as 3%, not as 0.03.</p>

CC BY-SA 3.0
2016-04-24T16:19:31.160Z
Of course! Cheers, I feel like an imbecile!
Kukko Pärssinen
CC BY-SA 3.0
2016-04-24T17:06:53.530Z
@KukkoPärssinen I have heard this question before :) If it solved your problem, please accept the answer by clicking the green check on its left.
Giskard
CC BY-SA 3.0
2016-04-23T16:57:36.003Z
2016-04-23T16:57:36.003Z
Giskard
<p>I am replicating a <a href="http://dx.doi.org/10.1257/jep.15.4.101" rel="nofollow noreferrer">2001 Journal of Economic Perspectives methodology paper on Vector Autoregression by James H. Stock and Adam Watson</a>. The paper can be found here: <a href="http://faculty.washington.edu/ezivot/econ584/stck_watson_var.pdf" rel="nofollow noreferrer">http://faculty.washington.edu/ezivot/econ584/stck_watson_var.pdf</a></p>

<p>I'm having a slight problem with the log differencing. In the paper the researchers state that they multiply the ln differenced price levels by 400. </p>

<p>I have no clue why this is done. The price level data is quarterly chain-weighted and seasonally adjusted implicit GDP deflator of the US. I would understand if they would multiply by four to get the annual inflation figures, but this is unclear. Any suggestions?</p>

<p><a href="https://i.sstatic.net/ToHNA.png" rel="nofollow noreferrer"><img src="https://i.sstatic.net/ToHNA.png" alt="enter image description here"></a></p>

CC BY-SA 3.0
2016-05-08T17:00:17.783Z
There is an unanswered question on that some study in the cross validated stack exchange: http://stats.stackexchange.com/questions/142511/svar-with-taylor-rule
Jan Höffler
<inflation><time-series>
Ln differenced price level times 400, why 400?
Kukko Pärssinen
# Ln differenced price level times 400, why 400?

(Asked by: username_0 on 2016-04-23)

I am replicating a [2001 Journal of Economic Perspectives methodology paper on Vector Autoregression by James H. Stock and Adam Watson](http://dx.doi.org/10.1257/jep.15.4.101). The paper can be found here: <http://faculty.washington.edu/ezivot/econ584/stck_watson_var.pdf>

I'm having a slight problem with the log differencing. In the paper the researchers state that they multiply the ln differenced price levels by 400.

I have no clue why this is done. The price level data is quarterly chain-weighted and seasonally adjusted implicit GDP deflator of the US. I would understand if they would multiply by four to get the annual inflation figures, but this is unclear. Any suggestions?

[![enter image description here](https://i.sstatic.net/ToHNA.png)](https://i.sstatic.net/ToHNA.png)

**Tags:** inflation, time-series

> **Comments:**
> **username_1**: There is an unanswered question on that some study in the cross validated stack exchange: http://stats.stackexchange.com/questions/142511/svar-with-taylor-rule  

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## 1 answers

### Answer by username_2 on 2016-04-23. Score: 2 | Accepted answer

You already accounted for multiplication by 4. Further multiplication by 100 to make the units of measurement percentage points? I.e. inflation is usually referred to as 3%, not as 0.03.

> **Comments:**
> **username_0**: Of course! Cheers, I feel like an imbecile!  
> **username_2**: @username_0 I have heard this question before :) If it solved your problem, please accept the answer by clicking the green check on its left.  

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