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Metas De Inflação E Vulnerabilidade Externa No Brasil


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  • Alexandre Batista Ferreira
  • Frederico Gonzaga Jayme Júnior


The central purpose of this study is to assess the performance of the inflation targeting regime adopted in Brazil, in a context of high exchange rate volatility, as well as high public debt. In order to accomplish this, a Vector Autoregressive methodology was used. The results suggest that: i) the interest rate is an important instrument of monetary policy; ii) there is presence of inflationary inertia; iii) changes in interest rate to fight inflation can provoke more inflation; iv) the inflation rate is quite sensitive to the exchange rate volatility; v) the inflation rate answers, in way erratic and not significant, to the variations in the government's nominal result; vi) inflation rate response to the innovations in the output gap is not significant; vii) output gap responses to inflation rate shocks does not reveal to be significant; and viii) the monetary policy affects the output gap. The main conclusion is that inflation target in Brazil is limited by the no coordination between monetary and fiscal policies, as well as the external vulnerability.

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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 XXXIII Encontro Nacional de Economia [Proceedings of the 33th Brazilian Economics Meeting] with number 035.

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Date of creation: 2005
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Handle: RePEc:anp:en2005:035

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