Author(s)

Denise Piper¹, Fernando Ferrari-Filho^2,3, Marcos Tadeu Lélis^3,4

¹Economics at Universidade Franciscana, Santa Maria, Brazil.
²Economics at Unifersidade Federal do Rio Grande do Sul, Porto Alegre, Brazil.
³Researcher at CNPq, Brasília, Brazil.
⁴Economics at Unisinos, Sao Leopoldo, Brazil.

The article presents an empirical test of the hypothesis that productivity expansions are the answer to the inflation problems experienced by the Brazilian economy. The study obtained evidence from the estimation of a Structural Autoregressive Vector (SVAR) model for the period after December 2009, which confirmed the existence of an inverse relationship between inflation and productivity in Brazil’s manufacturing industry. However, this relationship is inelastic; that is, Brazilian entrepreneurs tend to convert productivity gains into mark-up instead of passing them on to prices. Thus, productivity increases yield smaller inflation control effects than expected.

Economic Development, Inflation Targeting Regime, Non-Monetary Controls, Productivity

Piper, D., Ferrari-Filho, F., & Lélis, M. T. (2020). The Relationship between Productivity and Inflation: An Empirical Analysis of the Brazilian Economy. Theoretical Economics Letters, 10, 563-578. doi: 10.4236/tel.2020.103036.