Nominal Effects of Changes in Total Factor Productivity: Evidence for an Emerging Economy

  •  Leonardo Bianchi dos Santos    
  •  Ricardo Ramalhete Moreira    


Although there is a considerable amount of literature on applied Phillips Curves and Total Factor Productivity (TFP) for Brazil, the related works have not empirically addressed the effects of the latter on consumer inflation. Thus, our work provided evidence to bridge this gap. Through estimates from different New Keynesian Phillips Curves, and including TFP measures, we found robust impacts of productivity gains on the inflation rate of the Brazilian economy, suggesting an improvement of the trade-off between inflation and unemployment. Furthermore, we found strong evidence indicating that unemployment rate deviations are a better proxy for economic activity, when compared with output gaps, as a way to estimate New Keynesian Phillips curves.

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