The Phillips Curve in Brazil and inflation targeting policy - an analysis of the evolution of the trade-off over the period 1980-2010
Name: MATEUS ALVES NAZARETH
Publication date: 13/06/2011
Advisor:
Name |
Role |
|---|---|
| ALEXANDRE OTTONI TEATINI SALLES | Advisor * |
Examining board:
| Name |
Role |
|---|---|
| ALEXANDRE OTTONI TEATINI SALLES | Advisor * |
| GUTEMBERG HESPANHA BRASIL | Internal Examiner * |
Summary: Faced with a nonconsensual discussion regarding the existence or not of a tradeoff between inflation and unemployment (Phillips curve), this dissertation examines the evolution of this relationship in the Brazilian economy during the period 1980-2010 using two different analysis: The first is considered a static analysis, performed with the use of a simple linear regression. The second is a dynamic analysis, WHERE it is used a regression with time-varying coefficients, and the estimation of the coefficients is accomplished with the application of the Kalman filter. The econometric results show that the relationship between inflation and unemployment in fact changed over the period analyzed: The Phillips curve becomes horizontal after the Real Plan and is slightly positive after the Inflation Targeting Regime. Accordingly, this work is basically divided into two parts: The first consists of a brief review of the relationship between inflation and unemployment and the inflation targeting regime. The second part presents the econometric analysis, which describes the evolution of trade-off. Faced with the results, are presented their possible causes and is carried out a qualitative analysis of current monetary policy applied by the Central Bank of Brazil. Key-words: Phillips Curve; Inflation Targeting Regime; Linear Regression; Time Varying Coefficients; Kalman Filter.
