What Drives Inflation Expectations in Brazil? An Empirical Analysis
AbstractThis study examines the macroeconomic determinants of survey inflation expectations in Brazil since the adoption of inflation targeting in 1999. The results suggest that the inflation targeting framework has helped anchor expectations, with the dispersion of inflation expectations declining considerably, particularly during periods of high uncertainty. We also find that apart from the inflation target, the stance of fiscal policy, as proxied by the ratio of the consolidated primary surplus to GDP, has been instrumental in shaping expectations. The importance of past inflation in determining expectations appears to be relatively low, and the overall empirical evidence does not suggest the presence of substantial inertia in the inflation process.
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Bibliographic InfoPaper provided by International Monetary Fund in its series IMF Working Papers with number 05/109.
Date of creation: 01 Jun 2005
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Other versions of this item:
- Martin Cerisola & Gaston Gelos, 2009. "What drives inflation expectations in Brazil? An empirical analysis," Applied Economics, Taylor & Francis Journals, vol. 41(10), pages 1215-1227.
- NEP-ALL-2005-10-23 (All new papers)
- NEP-CBA-2005-11-14 (Central Banking)
- NEP-LAM-2005-10-31 (Central & South America)
- NEP-MAC-2005-10-24 (Macroeconomics)
- NEP-MON-2005-10-24 (Monetary Economics)
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