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A Note on the Nonlinearities of Brazilian Monetary Policy

Author

Listed:
  • Fernando Marques Mansilla
  • Elano Ferreira Arruda
  • Roberto Tatiwa Ferreira

Abstract

This note analyzes the occurrence of asymmetry in Brazilian monetary policy considering distinct inflation levels. For this purpose, we use data with monthly frequency between 2003 and 2021 and a nonlinear Taylor rule. The results indicate that under the low inflation scenario, the impact of the deviation of inflation expectations to the target is statistically insignificant, revealing a preference by the monetary authority for price stability. Besides, there is a smoothing process in the conduction of Brazilian monetary policy, and the economic activity and the exchange rate are not statistically significant in the central bank reaction function during the period studied.

Suggested Citation

  • Fernando Marques Mansilla & Elano Ferreira Arruda & Roberto Tatiwa Ferreira, 2024. "A Note on the Nonlinearities of Brazilian Monetary Policy," International Journal of Economics and Finance, Canadian Center of Science and Education, vol. 16(5), pages 1-20, May.
    • Handle: RePEc:ibn:ijefaa:v:16:y:2024:i:5:p:20
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    References listed on IDEAS

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    1. Barbosa, Fernando de Holanda & Camêlo, Felipe Diogo & João, Igor Custodio, 2016. "A Taxa De Juros Natural E A Regra De Taylor No Brasil: 2003/2015," Revista Brasileira de Economia - RBE, EPGE Brazilian School of Economics and Finance - FGV EPGE (Brazil), vol. 70(4), December.
    2. Surico, Paolo, 2007. "The Fed's monetary policy rule and U.S. inflation: The case of asymmetric preferences," Journal of Economic Dynamics and Control, Elsevier, vol. 31(1), pages 305-324, January.
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    More about this item

    JEL classification:

    • R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General - - - General
    • Z0 - Other Special Topics - - General

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