What Drives Inflation Expectations in Brazil? An Empirical Analysis

 
Author/Editor: Cerisola, Martin ; Gelos, Gaston
 
Publication Date: June 01, 2005
 
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Summary: This 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.
 
Series: Working Paper No. 05/109
Subject(s): Inflation | Brazil | Inflation targeting | Economic models

Author's Keyword(s): Inflation | inflation expectations | inflation targeting | Brazil
 
English
Publication Date: June 01, 2005
ISBN/ISSN: 1934-7073 Format: Paper
Stock No: WPIEA2005109 Pages: 22
Price:
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