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Supporting An Inflation Targeting Policy With The Measurement Of Inflation Credibility

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  • JANNIE ROSSOUW
  • FANIE JOUBERT

Abstract

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 pilot studies measuring the credibility of inflation in terms of an inflation credibility barometer. Despite initial discouraging results, the conclusion is that knowledge and information improve the credibility of inflation, but only one inflation rate (ideally the one used for inflation targeting purposes) should be communicated. Moreover, the rate used for targeting purposes should be specified with ease of communication in mind.

Suggested Citation

  • Jannie Rossouw & Fanie Joubert, 2005. "Supporting An Inflation Targeting Policy With The Measurement Of Inflation Credibility," South African Journal of Economics, Economic Society of South Africa, vol. 73(2), pages 321-336, June.
    • Handle: RePEc:bla:sajeco:v:73:y:2005:i:2:p:321-336
    DOI: 10.1111/j.1813-6982.2005.00020.x
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    References listed on IDEAS

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    1. Michael F. Bryan & Guhan Venkatu, 2001. "The demographics of inflation opinion surveys," Economic Commentary, Federal Reserve Bank of Cleveland, issue Oct.
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    Cited by:

    1. Stan du Plessis, 2014. "Targeting core inflation in emerging market economies," Working Papers 23/2014, Stellenbosch University, Department of Economics.
    2. Jannie Rossouw & Vishnu Padayachee, 2009. "Measuring Inflation Credibility: Results Of A First Representative South African Sample," South African Journal of Economics, Economic Society of South Africa, vol. 77(2), pages 314-331, June.

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