An estimation of the hybrid Phillips curve for Brazil in the inflation targeting regime

Authors

  • Divanildo Triches Universidade do Vale do Rio dos Sinos. PPGE/Unisinos
  • Flavio Tosi Feijó Universidade Federal do Rio Grande do Sul. PPGE/UFRGS

DOI:

https://doi.org/10.11606/1413-8050/ea150953

Keywords:

Hybrid Phillips Curve, inflation targeting, inflation expectation, inertial inflation.

Abstract

The aim of this paper is to investigate the dynamics of inflation in Brazil between 2000-IV to 2014-II, through the hybrid Phillips Curve approach. This econometric specification allows evaluating the forward looking and backward looking terms. The models were estimated by ARDL method and the results showed that the inclusion of unit labor cost as a proxy for economic activity generated a better fit in the estimation of the Phillips curve. The expectation of inflation has dominance in determining the dynamics of the Brazilian inflation. There is still an inertial component given by the rigidity of prices due to the indexation of several contracts and government managed prices.

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Published

2017-03-01

Issue

Vol. 21 No. 1 (2017)

Section

Papers

How to Cite

Triches, D., & Feijó, F. T. (2017). An estimation of the hybrid Phillips curve for Brazil in the inflation targeting regime. Economia Aplicada, 21(1), 29-43. https://doi.org/10.11606/1413-8050/ea150953