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What Drives Inflation Expectations in Brazil? An Empirical Analysis
Author:
Mr. Martin D. Cerisola
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and
Mr. R. G Gelos
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https://orcid.org/0000-0003-4362-676X
Series:
IMF Working Papers
Volume/Issue:
Volume 2005: Issue 109
Language:
English
Publication Date:
01 Jun 2005
DOI:
https://doi.org/10.5089/9781451861280.001
ISBN:
9781451861280
ISSN:
1018-5941
Pages:
22
Keywords:
WP; inflation expectation; central bank
Legal-disclaimer:
IMF Working Papers describe research in progress by the author(s) and are published to elicit comments and to encourage debate. The views expressed in IMF Working Papers are those of the author(s) and do not necessarily represent the views of the IMF, its Executive Board, or IMF management.
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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.
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Cover IMF Working Papers
IMF Working Papers
ISSN:
1018-5941
Publisher:
International Monetary Fund
Volume 2005: Issue 109