Influence of the economic environment on consumer confidence and consumption decisions in Brazil: an empirical analysis considering the effects of monetary credibility and fiscal credibility

Abstract

Credibility is important for the expectation formation in the regime of inflation targeting. This paper analyzes whether the credibility of the monetary authority and the fiscal credibility affect consumer confidence. After observing the influence of the economic environment on consumer confidence, the study verifies the influence of consumer confidence, together with other variables, on the consumption decisions. The results suggest that monetary credibility and fiscal credibility influence the confidence of Brazilian consumers and, consumer confidence is relevant to consumption decisions of different types of goods.