On the Application of Phase-Plane Plotting to Consumer Price Index Process

Abstract

The dynamics of the process typically shows more variation than the statics or position of the process. Phase-Plane Plot is known as a powerful graphical tool for exploring harmonic variation of a process. From the phase-plane plots, we expect to see features that would be hard to spot in the plot of the process itself. In this paper, we use the phase-plane plotting of Consumer Price Index(CPI) to investigate energy transfer within the economic system from 1985 to 2011 in Korea. We also discuss the relative effects of financial or economic shock during this period from the phase-plane plots of Korea CPI. We additionally conduct cluster analysis using the first and second derivatives of Korea CPI process to divide the phase-plane plots into several clusters.