Recent dynamics of Brazilian inflation in different environments of forward-looking expectations

Elano Ferreira Arruda (), Maria Thalita Arruda Oliveira () and Ivan Castelar ()

Brazilian Journal of Political Economy, 2017, vol. 37, issue 4, 808-831

Abstract: This work analyzes how the recent Brazilian inflation responds to economic cycles and its inertial component considering different environments of forward-looking expectations in the framework of the Hybrid New Keynesian Phillips Curve (HNKPC). To do this, use is made of monthly data from January 2002 to August 2015 and GMM-HAC estimates of the HNKPC. The results suggest that Brazilian inflation still has a strong inertial component and that in an environment of lower predictability of economic agents, inflation seems to be more sensitive to cyclical fluctuations in economic activity. Finally, It was observed a positive and significant pass-through exchange rate to inflation in Brazil. JEL Classification: E30; E31; E32.

Keywords: Economic cycles; expectations; inflation (search for similar items in EconPapers)
Date: 2017
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