Impact of the Pandemic on Currency Circulation in Brazil: Projections using the SARIMA Model

Abstract: This study analyzes the impact of the COVID-19 pandemic on currency circulation in Brazil by comparing actual data from 2000 to 2023 with counterfactual projections using the \textbf{SARIMA(3,1,1)(3,1,4)\textsubscript{12}} model. The model was selected based on an extensive parameter search, balancing accuracy and simplicity, and validated through the metrics MAPE, RMSE, and AIC. The results indicate a significant deviation between projected and observed values, with an average difference of R\$ 47.57 billion (13.95\%). This suggests that the pandemic, emergency policies, and the introduction of \textit{Pix} had a substantial impact on currency circulation. The robustness of the SARIMA model was confirmed, effectively capturing historical trends and seasonality, though findings emphasize the importance of considering exogenous variables, such as interest rates and macroeconomic policies, in future analyses. Future research should explore multivariate models incorporating economic indicators, long-term analysis of post-pandemic currency circulation trends, and studies on public cash-holding behavior. The results reinforce the need for continuous monitoring and econometric modeling to support decision-making in uncertain economic contexts.