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Inflation Persistence in Brazil - A Cross Country Comparison

Author/Editor: Shaun K. Roache
Authorized for Distribution: April 4, 2014
Electronic Access: Free Full Text (PDF file size is 803KB)
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Disclaimer: This Working Paper should not be reported as representing the views of the IMF. The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate.

Summary: Inflation persistence is sometimes defined as the tendency for price shocks to push the inflation rate away from its steady state—including an inflation target—for a prolonged period. Persistence is important because it affects the output costs of lowering inflation back to the target, often described as the “sacrifice ratio”. In this paper I use inflation expectations to provide a comparison of inflation persistence in Brazil with a sample of inflation targeting (IT) countries. This approach suggests that inflation persistence increased in Brazil through early 2013, in contrast to many of its IT peers, mainly due to “upward” persistence. The 2013 rate hiking cycle may have contributed to some recent decline in persistence.
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Series: Working Paper No. 14/55
Subject(s): Inflation | Brazil | Inflation targeting | Monetary policy | Cross country analysis | Economic models
    Published:   April 4, 2014        
    ISBN/ISSN:   9781475585230/1018-5941   Format:   Paper
    Stock No:   WPIEA2014055   Pages:   22
    Price:   US$18.00
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