Measuring Brazilian economic uncertainty

Pedro Costa Ferreira

Is economic uncertainty an important issue?

Media has been giving attention to the theme

Is it important to measure Brazilian economic uncertainty?

Historical periods that have affected the economic uncertainty indicator

Is it important to measure Brazilian economic uncertainty ?

Lula defending non-payment of external debt

Lula criticizing the monetary stability plan (Real)

"No one needs to teach me the importance of controlling inflation."

"We will preserve the primary surplus to prevent domestic debt from rising and destroying confidence in the government's ability to honor its commitments."

Is it important to measure Brazilian economic uncertainty ?

April 15th and 17th

Impeachment proceedings is initiated against Dilma

Dilma is Impeached

May 9th

Waldir Maranhão [interim president of the chamber of deputies] tries to annul the impeachment

May 10th

August 31th

Waldir Maranhão revokes his cancelation

Is it important to measure Brazilian economic uncertainty ?

Brazil under uncertainty

Temer is recorded giving approval to the purchase of Cunha's silence [this is an opinion of O Globo]

Is it important to measure Brazilian economic uncertainty ?

Partial before JBS audio was leaked

Partial after JBS audio was leaked

Is it important to measure Brazilian economic uncertainty ?

this is the number of times that the Central Bank has cited the word uncertainty in the minutes of the Meeting of the Monetary Policy Committee [May 2017]

"If sustained over a long period, high levels of uncertainty regarding the evolution of reforms and adjustments in the economy can have detrimental effects on economic activity."

source: O Globo (https://goo.gl/E1yd1v).

1989

1995

2000

2005

2010

2017

Total of parties in Brazil

Is it important to measure Brazilian economic uncertainty ?

How are we measuring the economic uncertainty?

Brazilian Economic Uncertainty Indicator

IIE-Br

IIE-Br = 0.8 x Media + 0.2 x FD

compound indicator

IIE-Br

The weights were chosen to preserve the higher number of peaks possible

Forecasts Disagreement

IIE-Br

Media

IIE-Br Media

IIE-Br Media

Mention of uncertainty

Term related to the economy: econ
Terms related to the uncertainty: incert, crise, instab

Basically, the indicator is measuring the economic uncertainty taking into account the frequency of the news related to the theme;

IIE-Br Media

Online

Printed

Medias	Type	Total of the news
Folha de São Paulo	Printed	212,721
Folha de São Paulo	Online	969,377
Valor Econômico	Printed	192,697
Valor Econômico	Online	213,486
Jornal O Globo	Online	286,651
Estadão de São Paulo	Online	236,653
Correio Braziliense	Online	238,743
Zero Hora	Online	142,259