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Inflation in Portugal Through the Lens of the Fair Model

Author

Listed:
  • Pedro Bação

    (Univ Coimbra, CeBER, Faculty of Economics)

  • José Diogo Silva

    (Univ Coimbra, Faculty of Economics)

Abstract

This study delves into the dynamics of inflation in Portugal, employing a cost-push model as the analytical framework. The model is estimated using data from 2000Q2 to 2020Q1, a period predating the onset of the COVID-19 pandemic and the surge in inflation. We then produce forecasts spanning from 2020Q2 to 2023Q2. The forecasts hint strongly at a structural break during this latter period, implying that the model offers insufficient representation of inflation dynamics in Portugal. We conclude with a discussion of the model's strengths and limitations in understanding inflation dynamics, shedding light on critical aspects that impact its explanatory power.

Suggested Citation

  • Pedro Bação & José Diogo Silva, 2023. "Inflation in Portugal Through the Lens of the Fair Model," Notas Económicas, Faculty of Economics, University of Coimbra, issue 57, pages 87-97, December.
    • Handle: RePEc:gmf:journl:y:2023:i:57:p:87:97
    DOI: 10.14195/2183-203X_57_4
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    More about this item

    Keywords

    Cost push; econometric modeling; Fair model; forecasting; inflation.;
    All these keywords.

    JEL classification:

    • E17 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Forecasting and Simulation: Models and Applications
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications

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