Open AccessA perspective on the measurement of inflation credibility
Author(s) -
Jannie Rossouw,
Fanie Joubert
Publication year - 2014
Publication title -
suid-afrikaanse tydskrif vir ekonomiese en bestuurswetenskappe/south african journal of economic and management sciences
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.277
H-Index - 17
eISSN - 2222-3436
pISSN - 1015-8812
DOI - 10.4102/sajems.v8i4.1179
Subject(s) - credibility , inflation (cosmology) , barometer , distrust , economics , monetary policy , inflation targeting , monetary economics , real interest rate , perspective (graphical) , political science , geography , mathematics , physics , geometry , theoretical physics , meteorology , law
Inflation targeting anchors inflation expectations, which are not within the sphere of control of the authorities, but can only be influenced over time by consistent policy. As public distrust of inflation figures will feed through to inflation expectations, this paper highlights a comparison of the credibility of two different measures of inflation in terms of an inflation credibility barometer. In a comparison of the barometer results to the analysis of inflation perceptions reported by other central banks, it is concluded that the barometer delivers superior results. The main recommendation is that respondents should be requested in a follow-up study to indicate whether they attach a higher degree of credibility to the overall inflation rate or the rate used for targeting purposes