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Política Monetária Ótima Em Um Contexto De Elevada Dívida Pública: O Caso Do Brasil

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Author Info
José Franco Medeiros de Morais
Joaquim Pinto de Andrade
Maria Luiza Falcão Silva

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Abstract

This paper calculates the optimal monetary policy rule for Brazilian economy, assuming that monetary authority adopts a flexible inflation targeting regime in which, besides the inflation target, there is also a target for public debt/GDP ratio. According to the open economy proposed model, risk premium is generated by high public debt. After estimating the parameters, Bellman equation is applied to determine the optimal monetary policy rule. Results suggest that when a target for public debt/GDP is taken into account in the loss function, monetary policy responds less aggressively to inflation shocks, while easing monetary policy becomes optimal response to positive shocks to public debt and risk premium.

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File URL: http://www.anpec.org.br/encontro2004/artigos/A04A030.pdf
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Paper provided by ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics] in its series Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] with number 030.

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Date of creation: 2004
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Handle: RePEc:anp:en2004:030

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Postal: Secretaria da ANPEC Av. Prof. Luciano Gualberto, 908 - Prédio FEA2 São Paulo, SP 05508-900 Brazil

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C61 - Mathematical and Quantitative Methods - - Mathematical Methods and Programming - - - Optimization Techniques; Programming Models; Dynamic Analysis
E63 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Comparative or Joint Analysis of Fiscal and Monetary Policy; Stabilization
E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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