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

Vol. 37 No. 4 (2017)

Oct-Dec / 2017
Published February 26, 2020
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Ferreira Arruda, Elano, Maria Thalita Arruda Oliveira, and Ivan Castelar. 2017. “Recent Dynamics of Brazilian Inflation in Different Environments of Forward-Looking Expectations”. Brazilian Journal of Political Economy 37 (4):808-31. https://doi.org/10.1590/0101-31572017v37n04a09.
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Recent dynamics of Brazilian inflation in different environments of forward-looking expectations

Elano Ferreira Arruda
Professor do Departamento de Economia Aplicada da Universidade Federal do Ceará.
Maria Thalita Arruda Oliveira
Doutoranda em Economia no Programa de Pós-Graduação em Economia da Universidade Federal do Ceará.
Ivan Castelar
Professor Titular da Universidade Federal do Ceará.
Brazilian Journal of Political Economy, Vol. 37 No. 4 (2017), Oct-Dec / 2017, Pages 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