Some prices are stickier than others. In South Africa (SA), consumer prices on average change eve... more Some prices are stickier than others. In South Africa (SA), consumer prices on average change every five months; with the most frequent prices changing every month and the least frequent changing every 15 months. Firms that change prices less frequently generally need to take account of the likely path of future inflation when setting these prices if they want to maximise profits. Therefore, prices that are sticky contain more forwardlooking information and can be exploited to uncover inflation expectations and underlying, or core, inflation. Using micro-price data this paper decomposes goods inflation into a flexibleand sticky-price inflation measure for South Africa at a product level from 2008 to 2015. Flexible-price inflation is more volatile, less persistent, and contributes the most to volatility in overall goods inflation. Sticky-price inflation is more persistent, less volatile and correlates well with future goods inflation. The advantage of sticky-price inflation is that it grounds the concept of underlying inflation into the theoretical framework currently used by central banks to make policy decisions and what is considered optimal policy, making it an ideal core inflation candidate for the central bank. We provide an initial analysis of the appeal of sticky-price inflation comparing it to a number of other core inflation measures including the common exclusion-based measure currently used as well as extend versions of trimmed means and persistence-weighted measures. JEL Classification: E31, D40, C55
Some prices are stickier than others. In South Africa (SA), consumer prices on average change eve... more Some prices are stickier than others. In South Africa (SA), consumer prices on average change every five months; with the most frequent prices changing every month and the least frequent changing every 15 months. Firms that change prices less frequently generally need to take account of the likely path of future inflation when setting these prices if they want to maximise profits. Therefore, prices that are sticky contain more forwardlooking information and can be exploited to uncover inflation expectations and underlying, or core, inflation. Using micro-price data this paper decomposes goods inflation into a flexibleand sticky-price inflation measure for South Africa at a product level from 2008 to 2015. Flexible-price inflation is more volatile, less persistent, and contributes the most to volatility in overall goods inflation. Sticky-price inflation is more persistent, less volatile and correlates well with future goods inflation. The advantage of sticky-price inflation is that i...
Mathematics is an important signal used for admission into commerce courses in South African univ... more Mathematics is an important signal used for admission into commerce courses in South African universities. In 2008 the new National Senior Certificate replaced the former Senior Certificate. This new exam no longer had different grades and thus created a structural break in the ability of the mathematics mark to signal preparedness for university. Although the Department of Education provided a “translation” key between the two Certificates, the University of the Witwatersrand (and other universities) admitted many more students in 2009 that met the entry requirements than previously. However, this cohort has lower average test and exam scores than previous years. This suggests that marks obtained for mathematics in the new National Senior Certificate are inflated when compared to the former Senior Certificate. This paper uses similar tests, for two commerce subjects, written by students in 2008 and 2009 to create a comparison between the mathematics marks under the two different ce...
Pupils’ competence and preparedness are assumed to be reflected in their school-leaving scores wh... more Pupils’ competence and preparedness are assumed to be reflected in their school-leaving scores which are used by employers and further education institutions as signals for selecting appropriate applicants. Schools need a consistent signal of their pupils’ potential success beyond school in order to prepare them appropriately. The introduction of the National Senior Certificate (NSC) in South Africa has led to
Some prices are stickier than others. In South Africa (SA), consumer prices on average change eve... more Some prices are stickier than others. In South Africa (SA), consumer prices on average change every five months; with the most frequent prices changing every month and the least frequent changing every 15 months. Firms that change prices less frequently generally need to take account of the likely path of future inflation when setting these prices if they want to maximise profits. Therefore, prices that are sticky contain more forwardlooking information and can be exploited to uncover inflation expectations and underlying, or core, inflation. Using micro-price data this paper decomposes goods inflation into a flexibleand sticky-price inflation measure for South Africa at a product level from 2008 to 2015. Flexible-price inflation is more volatile, less persistent, and contributes the most to volatility in overall goods inflation. Sticky-price inflation is more persistent, less volatile and correlates well with future goods inflation. The advantage of sticky-price inflation is that it grounds the concept of underlying inflation into the theoretical framework currently used by central banks to make policy decisions and what is considered optimal policy, making it an ideal core inflation candidate for the central bank. We provide an initial analysis of the appeal of sticky-price inflation comparing it to a number of other core inflation measures including the common exclusion-based measure currently used as well as extend versions of trimmed means and persistence-weighted measures. JEL Classification: E31, D40, C55
Some prices are stickier than others. In South Africa (SA), consumer prices on average change eve... more Some prices are stickier than others. In South Africa (SA), consumer prices on average change every five months; with the most frequent prices changing every month and the least frequent changing every 15 months. Firms that change prices less frequently generally need to take account of the likely path of future inflation when setting these prices if they want to maximise profits. Therefore, prices that are sticky contain more forwardlooking information and can be exploited to uncover inflation expectations and underlying, or core, inflation. Using micro-price data this paper decomposes goods inflation into a flexibleand sticky-price inflation measure for South Africa at a product level from 2008 to 2015. Flexible-price inflation is more volatile, less persistent, and contributes the most to volatility in overall goods inflation. Sticky-price inflation is more persistent, less volatile and correlates well with future goods inflation. The advantage of sticky-price inflation is that i...
Mathematics is an important signal used for admission into commerce courses in South African univ... more Mathematics is an important signal used for admission into commerce courses in South African universities. In 2008 the new National Senior Certificate replaced the former Senior Certificate. This new exam no longer had different grades and thus created a structural break in the ability of the mathematics mark to signal preparedness for university. Although the Department of Education provided a “translation” key between the two Certificates, the University of the Witwatersrand (and other universities) admitted many more students in 2009 that met the entry requirements than previously. However, this cohort has lower average test and exam scores than previous years. This suggests that marks obtained for mathematics in the new National Senior Certificate are inflated when compared to the former Senior Certificate. This paper uses similar tests, for two commerce subjects, written by students in 2008 and 2009 to create a comparison between the mathematics marks under the two different ce...
Pupils’ competence and preparedness are assumed to be reflected in their school-leaving scores wh... more Pupils’ competence and preparedness are assumed to be reflected in their school-leaving scores which are used by employers and further education institutions as signals for selecting appropriate applicants. Schools need a consistent signal of their pupils’ potential success beyond school in order to prepare them appropriately. The introduction of the National Senior Certificate (NSC) in South Africa has led to
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