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Interest rate and monetary transmition mechanisms in Brazil

Author

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  • Ricardo de Menezes Barboza

Abstract

This paper develops the hypothesis that the Brazilian interest rate is high as a result of partially obstructed monetary transmission mechanisms. Transmission failures arise due to the following characteristics of the Brazilian economy: (i) segmentation of the credit market; (ii) low penetration of free credit within the income determination process; (iii) truncated term structure of interest rates; (iv) participation of LFT’s in public debt; (v) participation of administered prices in the consumer price index. To achieve this result, the paper explores the BMW model and provides some preliminary evidence. JEL Classification: E40; E43; E52.

Suggested Citation

  • Ricardo de Menezes Barboza, 2015. "Interest rate and monetary transmition mechanisms in Brazil," Brazilian Journal of Political Economy, Center of Political Economy, vol. 35(1), pages 133-155.
    • Handle: RePEc:ekm:repojs:v:35:y:2015:i:1:p:133-155:id:218
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    More about this item

    Keywords

    monetary transmission mechanism; interest rate; monetary policy;
    All these keywords.

    JEL classification:

    • E40 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - General
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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