Impacts of global, US, and domestic uncertainty shocks to inflation rates and monetary policy of BRICS countries: PSVAR estimations

Abstract

This paper examines how global, US, and domestic uncertainties influence inflation dynamics and monetary policy in BRICS economies using a panel structural vector autoregression (panel SVAR) framework. The model accounts for cross-country heterogeneity and structural diversity, identifying shocks through established structural restrictions. The analysis covers Brazil, India, China, South Africa, and Saudi Arabia (as an emerging BRICS+ member). Results show that uncertainty shocks produce heterogeneous and asymmetric effects: Brazil, South Africa, Saudi Arabia, and India experience stronger and more persistent negative impacts, while China demonstrates greater resilience. Despite adverse macroeconomic outcomes, short-term policy rates remain relatively high, highlighting the key role of monetary policy in transmitting uncertainty. Although data constraints—particularly on uncertainty measures—limit the analysis, findings emphasize that policymakers should consider differing country responses when designing stabilization strategies. The study offers novel insights by integrating multiple uncertainty sources within a unified panel SVAR framework.