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Measuring Persistence in Inflation: Evidence For angola
Author(s) -
Belbute José Manuel,
Massala Leonardo Dia,
Delgado Júlio António
Publication year - 2016
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/saje.12118
Subject(s) - persistence (discontinuity) , inflation (cosmology) , economics , monetary policy , sample (material) , monetary economics , inflation targeting , headline , econometrics , macroeconomics , business , chemistry , physics , geotechnical engineering , chromatography , theoretical physics , advertising , engineering
The purpose of this paper is to examine the degree of persistence in five inflation indicators for Angola, and to identify the implications for decision making. Our results suggest that when structural breaks are accounted for, all five inflation indicators are stationary. Second, our findings suggest that persistence is not too high. Moreover, the degree of persistence is similar among the five inflation indicators and throughout the sample period. Finally, our results also show that extracting the most volatile components of the headline inflation indicator does not generate a new inflation indicator that is less volatile and more persistent than the original. These results have important policy implications as the National Bank of Angola is preparing to change its monetary policy focus to a more inflation‐targeting regime.