Inflation Dynamics in Brazil: The Case of a Small Open Economy
Inflation Dynamics in Brazil: The Case of a Small Open Economy
| dc.creator | Areosa, Waldyr Dutra | |
| dc.creator | Medeiros, Marcelo | |
| dc.date | 2007-05-01 | |
| dc.date.accessioned | 2022-11-03T21:17:53Z | |
| dc.date.available | 2022-11-03T21:17:53Z | |
| dc.identifier | https://bibliotecadigital.fgv.br/ojs/index.php/bre/article/view/1575 | |
| dc.identifier.uri | https://repositorioslatinoamericanos.uchile.cl/handle/2250/5047711 | |
| dc.description | This paper derives and estimates a structural model for inflation in an open economy. The model represents the standard new-Keynesian Phillips curve (NKPC) and the hybrid curve proposed by Woodford (2003) and Gal´ı and Gertler (1999) as special cases. We present two sets of estimates for the Brazilian economy, initially regarded as a closed economy and then as a small open economy. According to the recent literature, the model contemplates indexation to past inflation and a measure of marginal cost as relevant inflation indicators. Some of the results can be summarized as follows: (i) Brazil, when regarded as a closed economy, has a relatively higher level of nominal rigidity than that of the United States and Europe, and a high level of indexation as well; (ii) In an open economy with indexation, nominal exchange rate appreciation plus foreign inflation affects consumer inflation, and this effect becomes more intense with larger economic openness; (iii) There is a small direct impact of the variables associated with economic openness, with the sum of their coefficients being close to zero; (iv) However, the indirect impact is significant, consistently changing the weights associated with lagged inflation and the expected future inflation. | en-US |
| dc.description | This paper derives and estimates a structural model for inflation in an open economy. The model represents the standard new-Keynesian Phillips curve (NKPC) and the hybrid curve proposed by Woodford (2003) and Gal´ı and Gertler (1999) as special cases. We present two sets of estimates for the Brazilian economy, initially regarded as a closed economy and then as a small open economy. According to the recent literature, the model contemplates indexation to past inflation and a measure of marginal cost as relevant inflation indicators. Some of the results can be summarized as follows: (i) Brazil, when regarded as a closed economy, has a relatively higher level of nominal rigidity than that of the United States and Europe, and a high level of indexation as well; (ii) In an open economy with indexation, nominal exchange rate appreciation plus foreign inflation affects consumer inflation, and this effect becomes more intense with larger economic openness; (iii) There is a small direct impact of the variables associated with economic openness, with the sum of their coefficients being close to zero; (iv) However, the indirect impact is significant, consistently changing the weights associated with lagged inflation and the expected future inflation. | pt-BR |
| dc.format | application/pdf | |
| dc.format | application/pdf | |
| dc.language | eng | |
| dc.language | por | |
| dc.publisher | Sociedade Brasileira de Econometria | en-US |
| dc.relation | https://bibliotecadigital.fgv.br/ojs/index.php/bre/article/view/1575/1020 | |
| dc.relation | https://bibliotecadigital.fgv.br/ojs/index.php/bre/article/view/1575/1021 | |
| dc.source | Brazilian Review of Econometrics; Vol. 27 No. 1 (2007); 131-166 | en-US |
| dc.source | Brazilian Review of Econometrics; v. 27 n. 1 (2007); 131-166 | pt-BR |
| dc.source | 1980-2447 | |
| dc.title | Inflation Dynamics in Brazil: The Case of a Small Open Economy | en-US |
| dc.title | Inflation Dynamics in Brazil: The Case of a Small Open Economy | pt-BR |
| dc.type | info:eu-repo/semantics/article | |
| dc.type | info:eu-repo/semantics/publishedVersion |