Bayesian modeling of the Brazilian inflationary process

In this paper, the dynamics of the Brazilian inflationary process have been investigated using Bayesian models, considering the major determinants of inflation: monetary base, wages, federal debt, rate of interest, and rate of exchange. The effects of these exogenous variables, and the intervention variables that represent structural changes and/or external shocks provoked by stabilizing plans on the inflation rate have been analyzed. The predicted values of the inflation rate indicate that the model is adequate in explaining the Brazilian inflationary process.