The aim of this paper is to analyze, empirically, the relationship between the Central Bank’s reaction, also known as Taylor Rule, and the Brazilian public debt. The article is justified once the majority of the researches regarding the Brazilian reaction function doesn’t model the public debt. Our results show that when the Central Bank increases the interest rate, it manages to decrease inflation and the GDP growth. However, these impacts are smoothed by the increase of the debt/GDP and, as a result, by the probability of default. The latter, better than explaining higher interest rates, is explained by them .
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Article provided by ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics] in its journal Economia.
Volume (Year): 4 (2003) Issue (Month): 2 (July-December) Pages: 333-361 Download reference. The following formats are available: HTML
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Handle: RePEc:anp:econom:v:4:y:2003:i:2:p:333-361
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Find related papers by JEL classification: E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy E42 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Monetary Sytsems; Standards; Regimes; Government and the Monetary System C32 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Time-Series Models; Dynamic Quantile Regressions
References listed on IDEAS Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
André Minella & Paulo Springer de Freitas & Ilan Goldfajn & Marcelo Kfoury Muinhos, 2003.
"Inflation targeting in Brazil: lessons and challenges,"
BIS Papers chapters,
in: Bank for International Settlements (ed.), Monetary policy in a changing environment, volume 19, pages 106-133
Bank for International Settlements.
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