In the comments of this post, Andrew Coleman and myself decided to place down a little wager on price level growth during the next five years. The bet goes as follows:
If the CPI grows by more than 15% between its December 2010 level and its December 2015 level (excluding any changes to the GST rate), Matt pays Andrew $100 (in Dec 2010 prices)
If CPI grows by less than 15% during this period, Andrew pays Matt $100 (in Dec 2010 prices).
We put down this bet just to show that we believe our own positions enough to stake money on them. He believes there is some probability that the Reserve Bank will allow prices to grow at more than 2.8%pa during the next five years, and that this probability is sufficiently high for him to be willing to make this bet. On the other hand, I do not think this will happen.
Update: Eric Crampton has also joined the bet, sitting on Andrew’s side. So it is my $200 against $100 from each of them. Confirmation here – combined with an explanation why. I use the same explanation if I ever bet against the All Blacks in the work pool.