IDEAS home Printed from https://ideas.repec.org/p/rbz/wpaper/3243.html
   My bibliography  Save this paper

The formation of inflation expectations in South Africa

Author

Listed:
  • Nelene Ehlers
  • Rudi Steinbach

Abstract

A key factor in the inflation-targeting regime is the psychological process by which individuals and firms form their expectations of future inflation. From a monetary policy perspective, it is important to analyse this process, since under full rationality, only unexpected changes in inflation will affect real variables. In this paper, data from both the Bureau for Economic Researchs Inflation Expectations Survey and the Reuters Inflation Expectations Survey are evaluated, over different forecasting horizons to asses the characteristics of expectations formation across different economic groups in the South African economy. The results do not provide strong evidence to indicate that South African economic agents are exclusively rational or exclusively adaptive in formulating their inflation expectations. However, it appears that individuals employ some form of non-homogenous learning by combining some features of rationality with adaptive behaviour in order to minimise their forecast errors over time, subject to their respective available resources.

Suggested Citation

  • Nelene Ehlers & Rudi Steinbach, 2007. "The formation of inflation expectations in South Africa," Working Papers 3243, South African Reserve Bank.
    • Handle: RePEc:rbz:wpaper:3243
    as

    Download full text from publisher

    File URL: http://www.resbank.co.za/content/dam/sarb/publications/working-papers/2007/3243/wp0706.pdf
    File Function: Revision
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. South African Reserve Bank, 2017. "Occasional Bulletin of Economic Notes 2017/02," Working Papers 7851, South African Reserve Bank.
    2. Pierdzioch, Christian & Reid, Monique B. & Gupta, Rangan, 2016. "Inflation forecasts and forecaster herding: Evidence from South African survey data," Journal of Behavioral and Experimental Economics (formerly The Journal of Socio-Economics), Elsevier, vol. 62(C), pages 42-50.
    3. Nyoni, Thabani, 2018. "Modeling and Forecasting Inflation in Zimbabwe: a Generalized Autoregressive Conditionally Heteroskedastic (GARCH) approach," MPRA Paper 88132, University Library of Munich, Germany.
    4. Pierdzioch, Christian & Reid, Monique B. & Gupta, Rangan, 2016. "Forecasting the South African inflation rate: On asymmetric loss and forecast rationality," Economic Systems, Elsevier, vol. 40(1), pages 82-92.
    5. Lumengo Bonga-Bonga & Ntsakeseni Letitia Lebese, 2019. "Rethinking The Current Inflation Target Range In South Africa," Journal of Developing Areas, Tennessee State University, College of Business, vol. 53(2), pages 13-27, April-Jun.
    6. Christian Pierdzioch & Monique B. Reid & Rangan Gupta, 2018. "On the directional accuracy of inflation forecasts: evidence from South African survey data," Journal of Applied Statistics, Taylor & Francis Journals, vol. 45(5), pages 884-900, April.
    7. Monique B. Reid & Pierre L. Siklos, 2022. "How Firms and Experts View The Phillips Curve: Evidence from Individual and Aggregate Data from South Africa," Emerging Markets Finance and Trade, Taylor & Francis Journals, vol. 58(12), pages 3355-3376, September.

    More about this item

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rbz:wpaper:3243. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Jessica VanWyk (email available below). General contact details of provider: https://edirc.repec.org/data/rbagvza.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.