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Implementing Inflation Targeting in Brazil

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Author Info

  • Joel Bogdanski
  • Alexandre Antonio Tombini
  • Sérgio Ribeiro da Costa Werlang
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    Abstract

    Brazil has put in place an inflation-targeting framework for monetary policy in mid-1999, less than six months after moving to a floating exchange rate system. This paper presents the macroeconomic background that has led to the shift in monetary policy regime, and describes the general institutional arrangements and operational framework that has been adopted. The paper also discusses the basic modeling approach that has aided the decision-making process in the initial phase of inflation targeting in Brazil. We describe the family of small-scale macroeconomic models that has been used for informing and disciplining discussions about monetary policy within the Central Bank. These models contain few equations and few variables, but carry a considerable theoretical content and provide a stylized representation of the monetary policy transmission mechanism. They are easily understood, and especially suitable for simulation of a wide range of issues. We conclude with the main lessons that may be drawn from the initial Brazilian experience with inflation targeting.

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    Bibliographic Info

    Paper provided by Central Bank of Brazil, Research Department in its series Working Papers Series with number 1.

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    Date of creation: Jul 2000
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    Handle: RePEc:bcb:wpaper:1

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    Citations

    Blog mentions

    As found by EconAcademics.org, the blog aggregator for Economics research:
    1. The Failure of Inflation Targeting in Brazil
      by Pedro H. Albuquerque in Incentives Matter on 2009-03-19 16:57:00
    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    Cited by:
    1. Carlos Hamilton Vasconcelos Araujo & Marta Baltar Moreira Areosa & Osmani Teixera de Carvalho Guillén, 2004. "Estimating Potential Output And The Output Gap For Brazil," Anais do XXXII Encontro Nacional de Economia [Proceedings of the 32th Brazilian Economics Meeting] 041, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    2. Philip Arestis & Luiz Fernando de Paula & Fernando Ferrari-Filho, 2006. "Inflation Targeting In Emerging Countries: The Case Of Brazil," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 42, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    3. Reginaldo P. Nogueira Jnr, 2006. "Inflation Targeting, Exchange Rate Pass-Through and 'Fear of Floating'," Studies in Economics 0605, Department of Economics, University of Kent.
    4. Reginaldo P. Nogueira Jnr, 2006. "Inflation Targeting and the Role of Exchange Rate Pass-through," Studies in Economics 0602, Department of Economics, University of Kent.
    5. Luis Catão & Adrian Pagan, 2010. "The Credit Channel and Monetary Transmission in Brazil and Chile: A Structured VAR Approach," NCER Working Paper Series 53, National Centre for Econometric Research.
    6. Elaine Cristina de Piza & Joilson Dias, 2006. "Novo Consenso Macroeconômico E Política Monetária No Brasil: Uma Avaliação Empírica," Anais do XXXIV Encontro Nacional de Economia [Proceedings of the 34th Brazilian Economics Meeting] 164, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    7. Pedro H. Albuquerque & Solange Gouvea, 2005. "Canaries and Vultures: A Quantitative History of Monetary Mismanagement in Brazil," Development and Comp Systems 0511027, EconWPA.
    8. Guillermo Ortiz, 2002. "Monetary policy in a changing economic environment : the Latin American experience," Proceedings, Federal Reserve Bank of Kansas City, pages 207-239.
    9. Alberto Melo, 2003. "La competitividad de Perú después de la década de reforma: Diagnóstico y propuestas," RES Working Papers 1004, Inter-American Development Bank, Research Department.
    10. McCallum, Bennett T, 2000. "The Present and Future of Monetary Policy Rules," International Finance, Wiley Blackwell, vol. 3(2), pages 273-86, July.
    11. Strachman, Eduardo, 2009. "Implementing inflation targeting in Brazil: an institutional analysis," MPRA Paper 15131, University Library of Munich, Germany, revised May 2009.
    12. Guillermo Ortiz, 2002. "Central bank perspectives on stabilization policy," Economic Review, Federal Reserve Bank of Kansas City, issue Q IV, pages 37-68.
    13. Frank A. Wolak, 2003. "Designing Competitive Wholesale Electricity Markets for Latin American Countries," RES Working Papers 1003, Inter-American Development Bank, Research Department.
    14. Fabio Kanczuk, 2004. "Real Interest Rates and Brazilian Business Cycles," Review of Economic Dynamics, Elsevier for the Society for Economic Dynamics, vol. 7(2), pages 436-455, April.
    15. Dionísio Dias Carneiro, 2000. "Inflation targeting in Brazil: what difference does a year make?," Textos para discussão 429, Department of Economics PUC-Rio (Brazil).
    16. Morón, Eduardo & Winkelried, Diego, 2002. "Reglas de política monetaria para economías financieramente vulnerables," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 8, pages 49-76.

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