The methodology first used by Blanchard and Quah (1989) to identify permanent (supply) and transitory (demand) disturbances in the output process is applied here for Brazil's economy. Unemployment is modeled as a stationary series, but structural changes tests indicate the presence of a break in 1987, after the collapse of Cruzado's Plan. Overall, the identification scheme indicates that nominal rigidities in the Brazilian economy are small compared to those in the U.S. economy. It is also found that the 1994 expansion and the recessions of 1981 and 1990 were the most supply-driven periods among the peaks and troughs in the sample.