@fcamargo.bsky.social
Int'l economics & applied mathematics
New blog post. What do oil prices do to the US economy?
While answering this very practical and interesting question, I also aim to make a more general point: models are effective means of illustrating and summarising a technical story
Hope you enjoy it
fcamargo.substack.com/p/what-do-oi...
The carry-over into Q3 2024 for Brazilian activity is strong, but momentum already fades at the margin. Retail sales and labour market indicators already point to weaker sequential growth.
The economy will still grow by a solid 3% this year, though.
Advanced economies are struggling a little more with inflation at the "last mile".
One could have argued that more productivity is indicative of prices being more flexible. The post-pandemic world data point otherwise
The Brazilian consumer outlook is becoming increasingly more fragile. Real wages are not on par with consumption growth, meaning much of the current levels of consumption can only be sustained through lower savings.
Household spending growth is bound to weaken
Great vlog by Damodaran
www.youtube.com/watch?v=0o1M...
New blog post. This time I am breaking US household consumption apart to show its links to income and employment data. Useful for storytelling purposes and not something people usually find in textbook macro.
I hope some of you can enjoy.
fcamargo.substack.com/p/breaking-d...
Southern floods to pressure CPI in ๐ง๐ท
We revised our end-2024 inflation forecast up by 0.3ppts, to 4.0% y/y. Devastating floods in the Rio Grande do Sul state will impact food inflation in the coming months. The situation remains fluid and implies an upward risk to our baseline.
New blog post. Finance content this time around.
Tried my best to bring some novelty to the rent/buy dilemma.
As usual, free spreadsheet attached so you can do your own calculations.
fcamargo.substack.com/p/the-case-f...
New blog post. Back to finance content this time
This is my best take on old the rent/buy problem and I think I managed to bring some novelty to it.
As usual, there's a free spreadsheet attached so you can do your own calculations.
fcamargo.substack.com/p/the-case-forโฆ
fcamargo.substack.com/p/dynamics-i...
My latest on Substack
The 1st scenario (red) is a benchmark situation where the economy runs its appropriate due course without additional government intervention.
In our baseline (black), the Selic rate parks at 9.5% until 2026 before the BCB adjusts it down to 8% in a couple of years' lag.
n/n
In the figure below I've layed out two scenarios.
The red line is a "shock free" model result, considering Q1 2024 starting conditions and my calibrated steady-state targets.
The black line considers the expansionary fiscal policy and inflation convergence skepticism shocks.
3) Because of market's scepticism about the actual 3% target centre. Since Lula voiced his will to "relax" the objective for being too low, forecasters were confused if it will be calibrated up in upcoming Monetary Council meetings. The Focus survey sees it at 3.5% for 2026.
4/n
2) The fiscal stance will remain less contractionary than it should be. Specialists are right to point that this gov't is unlikely to achieve a balanced primary fiscal result next year. Demand will be too strong for inflation to converge to target.
3/n
1) Because real wage growth hovers around 4 to 5%, way above the expected productivity gain of about 2% for this year. This will keep services inflation high for longer, as we all know how particularly sticky nominal salaries tend to be in this economy.
2/n
A brief note on Brazil's economic conjuncture
Will the BCB stop the rate cutting cycle?
Long story short, that's up to inflation. Expectation surveys and us are unconvinced further target convergence can be attained once inflation hits 4%. That is so for three reasons.
1/n
I think this might be a good starting point for me in this new network.
fcamargo.substack.com/p/on-purpose...
