Inflation targeting in Brazil stabilizes expectations, fiscal policy key influencer.
The study looked at what influences people's expectations about prices going up in Brazil. They found that the way the government manages money has a big impact on these expectations. When the government saves more money compared to what it spends, people tend to think prices will stay stable. Also, the study showed that past price increases don't have a strong effect on what people expect in the future. Overall, the results suggest that the way the government handles money and sets goals for prices can help keep people's expectations about prices in check.