Empirical analysis of the determinants of the IPCA for the period of 2000 to 2011: an approach based on a SVAR model

Abstract

This study examines empirically the determinants of the Brazilian inflation, measured by the Broad Consumer Price Index (IPCA) and its decomposition, estimating two equations and using an autoregressive model. The database covers the period from January 2000 to December 2011. Five main groups are mentioned as the determinants of inflation: i) Aggregate Demand; ii) Aggregate Supply; iii) Exchange Rate; iv) Salaries and v) Inertia. The evidences reveals that inertia, external factors and the supply conditions overlap the demand in the determination of the Brazilian inflation. Thus, inflation shows to be little sensitive to the level of activity.

Inflation inertia: a time-series comparative analysis

“…In doing so, this study goes beyond the literature's state of the art. There are a lot of studies analyzing Brazilian inflation inertia -e.g., Paula e Saraiva (2015), Summa e Macrini (2014), Machado e Portugal (2014), Leite, Hermann e Pimentel (2016), Abrita, Araújo e Neto (2017), Triches e Feijó (2017), Oliveira e Feijó (2017). Nevertheless, comparing inflation inertia with other economies is not a main objective of this literature.…”