IDEALS Home University of Illinois at Urbana-Champaign logo The Alma Mater The Main Quad

Essays on prices and inflation dynamics with evidence from Brazil

Show full item record

Bookmark or cite this item: http://hdl.handle.net/2142/19364

Files in this item

File Description Format
PDF 9702633.pdf (3MB) Restricted to U of Illinois (no description provided) PDF
Title: Essays on prices and inflation dynamics with evidence from Brazil
Author(s): Paiva, Claudio Castro
Doctoral Committee Chair(s): Baer, Werner W.
Department / Program: Economics
Discipline: Economics
Degree Granting Institution: University of Illinois at Urbana-Champaign
Degree: Ph.D.
Genre: Dissertation
Subject(s): Economics, General Economics, Finance
Abstract: Paper 1. This paper builds on the work of Stigler and Peltzman, who argue that regulators try to maximize political support from consumers and producers by determining a price between the competitive and monopolistic levels. My model considers that a regulator's behavior might change with the proximity of elections. The regulator has incentives to impose higher prices when elections are relatively far ahead and lower prices in periods that immediately precede an important election (a political price cycle). Time series analysis indicate that the Brazilian gasoline market between 1969-1982 experienced such cycle.Paper 2. This paper presents empirical testing of the hypothesis that market concentration played a role in the acceleration of inflation in Brazil after 1980. The series used include the inflation rate and the rates of change in oligopolistic and competitive prices. Structural breaks introduced by five price freezes implemented during the period analyzed (1980-1994) require the use of Perron-type stationarity tests. Cointegration tests which also account for the structural breaks show that all series are cointegrated, i.e., the acceleration of inflation was not associated with long-term changes in sector pricing behavior. Granger causality tests indicate that changes in oligopolistic-price inflation occurred after changes in the other price series, and thus cannot have caused inflation acceleration as often presumed. Estimation of the series' degree of shock persistence show that oligopolistic sectors have no advantage in sustaining real price increases in the long run. These findings suggest that the price controls implemented in the period were not appropriate stabilization tools.Paper 3. This paper describes recent studies which argue that the substitution of the Brazilian "indexed currency" for the domestic currency had a positive aspect: it guaranteed a minimum demand for the domestic currency by avoiding the popularization of the dollar as an alternative. My analysis, instead, stresses the negative impact of the provision of the indexed currency at early stages of the inflationary process: with positive returns, no liquidity/transaction costs and low risk, the overnight market might have reduced money demand below what it would be if the dollar were the only alternative.The paper also describes significant legislation and regulation changes introduced in the Brazilian financial markets between 1964-1992. Consideration of these changes might improve money demand estimations.
Issue Date: 1996
Type: Text
Language: English
URI: http://hdl.handle.net/2142/19364
ISBN: 9780591089585
Rights Information: Copyright 1996 Paiva, Claudio Castro
Date Available in IDEALS: 2011-05-07
Identifier in Online Catalog: AAI9702633
OCLC Identifier: (UMI)AAI9702633
 

This item appears in the following Collection(s)

Show full item record

Item Statistics

  • Total Downloads: 0
  • Downloads this Month: 0
  • Downloads Today: 0

Browse

My Account

Information

Access Key