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Central Bank Transparency and Financial Market: Evidence for the Brazilian Case

Author

Listed:
  • Helder Ferreira de Mendonça

    () (Universidade Federal Fluminense)

  • José Simão Filho

    () (Universidade Federal de Juiz de Fora)

Abstract

The main objective of this paper is an empirical analysis concerning the effects caused by Central Bank of Brazil transparency on the Brazilian financial market. Furthermore, a brief review of the literature regarding central bank transparency is presented. The effects of the different dimensions of the monetary authority’s transparency on yield interest are examined. Moreover, the consequences regarding changes in the country risk are considered in this study. The findings denote that the Central Bank of Brazil transparency works as a guide for the future interest rate market and that the different dimensions of transparency contribute to a better market efficiency.

Suggested Citation

  • Helder Ferreira de Mendonça & José Simão Filho, 2011. "Central Bank Transparency and Financial Market: Evidence for the Brazilian Case," Brazilian Review of Finance, Brazilian Society of Finance, vol. 9(1), pages 51-67.
  • Handle: RePEc:brf:journl:v:9:y:2011:i:1:p:51-67
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    References listed on IDEAS

    as
    1. Eijffinger, Sylvester C W & Hoeberichts, Marco, 2002. "Central Bank Accountability and Transparency: Theory and Some Evidence," International Finance, Wiley Blackwell, vol. 5(1), pages 73-96, Spring.
    2. Alan S. Blinder & Michael Ehrmann & Marcel Fratzscher & Jakob De Haan & David-Jan Jansen, 2008. "Central Bank Communication and Monetary Policy: A Survey of Theory and Evidence," Journal of Economic Literature, American Economic Association, vol. 46(4), pages 910-945, December.
    3. repec:pri:cepsud:161blinder is not listed on IDEAS
    4. Eijffinger, Sylvester C.W. & Geraats, Petra M., 2006. "How transparent are central banks?," European Journal of Political Economy, Elsevier, vol. 22(1), pages 1-21, March.
    5. Shin, Hyun Song & Morris, Stephen, 2000. "Welfare effects of public information," Discussion Paper Series 1: Economic Studies 2000,07, Deutsche Bundesbank.
    6. Chadha, Jagjit S. & Nolan, Charles, 2001. "Inflation Targeting, Transparency and Interest Rate Volatility: Ditching Monetary Mystique in the U.K," Journal of Macroeconomics, Elsevier, vol. 23(3), pages 349-366, July.
    7. Svensson, Lars E. O., 1999. "Monetary policy issues for the Eurosystem," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 51(1), pages 79-136, December.
    8. Courtenay, Roger & Clare, Andrew, 2001. "What can we learn about monetary policy transparency from financial market data?," Discussion Paper Series 1: Economic Studies 2001,06, Deutsche Bundesbank.
    9. David Stasavage & Georgios Chortareas & Gabriel Sterne, 2002. "Does it pay to be transparent? international evidence form central bank forecasts," Review, Federal Reserve Bank of St. Louis, issue jul, pages 99-118.
    10. Walsh, Carl E, 2003. " Accountability, Transparency, and Inflation Targeting," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 35(5), pages 829-849, October.
    11. Herrendorf, Berthold, 1998. "Inflation Targeting as a Way of Precommitment," Oxford Economic Papers, Oxford University Press, vol. 50(3), pages 431-448, July.
    12. Refet S. Gürkaynak & Brian Sack & Eric Swanson, 2005. "The Sensitivity of Long-Term Interest Rates to Economic News: Evidence and Implications for Macroeconomic Models," American Economic Review, American Economic Association, vol. 95(1), pages 425-436, March.
    13. Petra M. Geraats, 2002. "Central Bank Transparency," Economic Journal, Royal Economic Society, vol. 112(483), pages 532-565, November.
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    More about this item

    Keywords

    transparency; accountability; inflation targeting; yield interest;

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

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