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INFLATION PERSISTENCE AND CORE INFLATION: THE CASE OF SOUTH AFRICA
Author(s) -
Rangasamy Logan
Publication year - 2009
Publication title -
south african journal of economics
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.502
H-Index - 31
eISSN - 1813-6982
pISSN - 0038-2280
DOI - 10.1111/j.1813-6982.2009.01222.x
Subject(s) - inflation (cosmology) , economics , persistence (discontinuity) , core inflation , core (optical fiber) , monetary policy , macroeconomics , identification (biology) , aggregate (composite) , small open economy , measure (data warehouse) , real interest rate , monetary economics , inflation targeting , computer science , telecommunications , physics , botany , geotechnical engineering , materials science , database , biology , theoretical physics , engineering , composite material
This paper analyses the persistence of inflation in South Africa since 1981. A measure of the persistence of inflation provides important information about the impact of shocks on the economy over time. This information can be extremely useful for the purpose of setting monetary policy, especially in a small, open economy like South Africa. In addition, an estimate of persistence at the disaggregate level helps in the identification of the main drivers of aggregate inflation. This information is useful in deriving a core measure of South African inflation, which outperforms some of the more readily available core measures in identifying the underlying inflationary pressures in the economy.