Industrial pricing in Brazil in the 2010s: The pass-through effect

Autor: Felipe Câmara, Carmem Feijo
Jazyk: angličtina
Rok vydání: 2017
Předmět:
Zdroj: EconomiA, Vol 18, Iss 1, Pp 60-72 (2017)
Druh dokumentu: article
ISSN: 1517-7580
DOI: 10.1016/j.econ.2016.12.003
Popis: The aim of this paper is to discuss the impact of costs on industrial inflation in Brazil. Assuming that inflation is mainly cost-push, this paper estimates the exchange rate pass-through on industrial prices. Based on Kalecki’s price equation, the paper explores data from the producer price index from 2010 onward. One of the main findings is that more than 60% of the inflationary acceleration in the industrial prices can be explained by exchange rate devaluations. The econometric exercise also showed that when demand increases, even if labor unit costs do not change, firms increase their profit margin. Finally, the paper questions the effectiveness of the inflation targeting policy, when the diagnosis to the pressure on prices comes from the costs, and not from demand.
Databáze: Directory of Open Access Journals