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Inflation Targeting in Brazil: Constructing Credibility Under Exchange Rate Volatility
| Content Provider | Semantic Scholar |
|---|---|
| Author | Minella, André Goldfajn, Ilan Muinhos, Marcelo Kfoury |
| Copyright Year | 2003 |
| Abstract | This paper assesses the challenges faced by the inflation-targeting regime in Brazil. The confidence crisis in the future performance of the Brazilian economy and the increase in risk aversion in international markets were responsible for a sudden stop of capital inflows in 2002 that caused a significant depreciation of the exchange rate. The inflation-targeting framework has played a critical role in macroeconomic stabilization. We stress two important challenges: construction of credibility and exchange rate volatility. The estimations indicate the following results: i) the inflation targets have worked as an important coordinator of expectations; ii) the Central Bank has reacted strongly to inflation expectations; iii) there has been a reduction in the degree of inflation persistence; and iv) the exchange rate pass-through for "administered or monitored" prices is two times higher than for "market" prices. |
| Starting Page | 1015 |
| Ending Page | 1040 |
| Page Count | 26 |
| File Format | PDF HTM / HTML |
| DOI | 10.1016/j.jimonfin.2003.09.008 |
| Alternate Webpage(s) | https://www.bcb.gov.br/pec/wps/ingl/wps77.pdf |
| Alternate Webpage(s) | https://www.bcb.gov.br/Pec/Depep/Seminarios/2003_VSemAnualMetasInflBCB/Arquivos/2003_VSemAnualMetasInflBCB_Minella_Freitas_Goldfajn_Muinhos.pdf |
| Alternate Webpage(s) | http://www.anpec.org.br/encontro2003/artigos/B26.pdf |
| Alternate Webpage(s) | https://ecomod.net/sites/default/files/document-conference/ecomod2003/Minella.pdf |
| Alternate Webpage(s) | https://doi.org/10.1016/j.jimonfin.2003.09.008 |
| Volume Number | 22 |
| Language | English |
| Access Restriction | Open |
| Content Type | Text |
| Resource Type | Article |
