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Transparency and inflation: What is the effect on the Brazilian economy?

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  • de Mendonça, Helder Ferreira
  • de Siqueira Galveas, Karine Alves

Abstract

This paper presents empirical evidence concerning the effect of central bank transparency on inflation considering the Brazilian case after the adoption of inflation targeting. Two indices for measuring transparency, based on forward-looking and backwardlooking views, are developed. Furthermore, empirical evidence is divided into three steps: (i) analysis of simple correlation through scatterplot diagrams; (ii) use of VAR models; and (iii) estimation of different specifications of the Phillips curve using OLS and GMM based on the structural model used by the Central Bank of Brazil (CBB). The findings allow one to conjecture that inflation expectations are well coordinated by the CBB. In short, the transparency of information by the CBB is a very important tool for guiding public expectations and thus contributes to maintain inflation under control.

Suggested Citation

  • de Mendonça, Helder Ferreira & de Siqueira Galveas, Karine Alves, 2013. "Transparency and inflation: What is the effect on the Brazilian economy?," Economic Systems, Elsevier, vol. 37(1), pages 69-80.
  • Handle: RePEc:eee:ecosys:v:37:y:2013:i:1:p:69-80
    DOI: 10.1016/j.ecosys.2012.06.003
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    References listed on IDEAS

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    Cited by:

    1. Athina Zervoyianni & Athanasios Anastasiou & Andreas Anastasiou, 2014. "Does central bank independence really matter? Re-assessing the role of the independence of monetary policy-makers in macroeconomic outcomes," International Journal of Economics and Business Research, Inderscience Enterprises Ltd, vol. 8(4), pages 427-473.
    2. de Guimarães e Souza, Gustavo José & de Mendonça, Helder Ferreira & de Andrade, Joaquim Pinto, 2016. "Inflation targeting on output growth: A pulse dummy analysis of dynamic macroeconomic panel data," Economic Systems, Elsevier, vol. 40(1), pages 145-169.
    3. Helder Mendonça & Felipe Tostes, 2015. "The Effect of Monetary and Fiscal Credibility on Exchange Rate Pass-Through in an Emerging Economy," Open Economies Review, Springer, vol. 26(4), pages 787-816, September.

    More about this item

    Keywords

    Central bank transparency; Monetary policy; Inflation targeting;

    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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