We construct a dynamic general equilibrium model calibrated to the Brazilian economy, in which a fraction of the firms set nominal wages one period in advance, according to its expected value. The artificial economy simulations generate series consistent with real data, and with a typical estimation of a structural Inflation Targeting model. We argue that these structural models specifications are incorrect, for not considering supply shocks. In contrast, our model can separate supply and demand shocks effects, in addition of being (potentially) robust to the Lucas' Critique.
