IDEAS home Printed from https://ideas.repec.org/p/cdp/texdis/td321.html
   My bibliography  Save this paper

Os mecanismos de transmissão da política monetária: uma abordagem teórica

Author

Listed:
  • Cláudio Gontijo

    (UFMG)

Abstract

This article examines critically the dominant theory of the monetary transmission mechanisms. It shows that monetary policy has abandoned the money supply as the instrument for inflationary control in favor of the interest rate. Formed in the market of bank reserves, the basic interest rate represents the opportunity cost of capital, which makes it a variable that affects the value of real and financial assets, impacting the supply of money and credit and, through the "wealth effects" and the availability of credit, the demand for consumption goods, housing and inventories fluctuations, which is the most important variable to explain economic downturns. It shows that the main effects of aggregate demand variations are felt through changes in real output and not in prices. Considering the success of cambial anchoring in curbing high inflation/hyperinflation and the failure of aggregate-demand-based stabilization programs, it concludes that perhaps the main channel through which changes in the interest rate affects the price level is the exchange rate, though the money supply still has a secondary role.

Suggested Citation

  • Cláudio Gontijo, 2007. "Os mecanismos de transmissão da política monetária: uma abordagem teórica," Textos para Discussão Cedeplar-UFMG td321, Cedeplar, Universidade Federal de Minas Gerais.
  • Handle: RePEc:cdp:texdis:td321
    as

    Download full text from publisher

    File URL: http://www.cedeplar.ufmg.br/pesquisas/td/TD%20321.pdf
    Download Restriction: no

    More about this item

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:cdp:texdis:td321. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Gustavo Britto). General contact details of provider: http://edirc.repec.org/data/pufmgbr.html .

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.