operated and its importance in term

operated and its importance in terms of channeling interest rate impacts on inflation has been
negligible.8
The structural models are complemented by a set of short-term models. These
complementary models include Vector Autoregressive (VAR) models and Autoregressive
Moving Average (ARMA) time-series models and serve three basic purposes: (i) providing an
alternative short-term forecast for the inflation rate and, therefore, permitting a consistency check
with the forecasts resulting from the structural models; (ii) permitting the use of the inflation
forecast resulting from these models for the purposes of estimating (with the structural model)
the ex-ante interest rate (which is an explanatory variable in the aggregate demand equation in
some of the estimated structural models), as well as in the forward-looking interest rate rule
(which is one of the equations in the structural models); and (iii) allowing to simulate shocks to
specific components of the IPCA, like for instance, changes in prices set by the public sector.