What drives inflation expectations in Brazil? Public versus private information

Produced by: 
Bank of International Settlements
Available from: 
February 2015
Paper author(s): 
Waldyr D. Areosa
Topic: 
Macroeconomics - Economic growth - Monetary Policy
Year: 
2016

This article applies a noisy information model with strategic interactions ‡ la Morris and Shin (2002) to a panel from the Central Bank of Brazil Market Expectations System to provide evidence of how professional forecasters weight private and public information when building ináation expectations in Brazil. The main results are: (i) forecasters attach more weight to public information than private information because (ii) public information is more precise than private information. Nevertheless, (iii) forecasters overweight private information in order to (iv) di§erentiate themselves from each other (strategic substitutability).

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