Price rigidity in Brazil: Microeconomic evidence and Macroeconomic Implications

Debora Silva Oliveira () and Mauro Rodrigues

No 2021_21, Working Papers, Department of Economics from University of São Paulo (FEA-USP)

Abstract: This paper calibrates multi-sector models of menu costs with intermediate inputs to the Brazilian economy. In particular, we use the model proposed by Nakamura and Steinsson (2010) to undestand the degree of monetary non-neutralitry induced by price rigidity. For comparison, we estimate a VAR model for the aggregate economy (Shapiro and Watson, 1988) and compute the share of real GDP fluctuations due to nominal shocks. Multi-sector models account for up to 12.6% of output fluctuations. This is consistent with our VAR estimations, where the nominal component is responsible for approximately 15% of the observed variation in aggregate output.

Keywords: Price rigidity; monetary non-neutrality; Microdata (search for similar items in EconPapers)
JEL-codes: E30 E50 (search for similar items in EconPapers)
Date: 2021-08-05
New Economics Papers: this item is included in nep-dge, nep-mac and nep-mon
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