The aim of this paper is to analyze the effects of monetary and fiscal credibility, and other expectational variables related to the macroeconomic environment regarding the expectations of entrepreneurs. It also examines the influence of entrepreneurs' expectations on investment decisions and employment in Brazil during the regime of inflation targeting. The results suggest that the commitment of both monetary and fiscal authorities with their goals plays a fundamental role in the formation of entrepreneurs' expectations about the future of the economy. Moreover, the findings also indicate that both aggregate investment and employment are affected by entrepreneurs' expectations.
Credibility; Expectations; Public debt; Investment; Employment
