AN EVALUATION OF MONETARY POLICY IN EXCHANGE RATE AND INFLATION TARGETING REGIMES

• Autor(a) principal: Santos, Filipe Rodrigues dos
• Data de Publicação: 2019
• Outros Autores: Lopes, Luckas Sabioni, Soares, Thiago Costa, Lima Júnior, Luiz Antônio de
• Tipo de documento: Artigo
• Idioma: por
• Título da fonte: Análise Econômica (Online)
• Texto Completo: https://seer.ufrgs.br/index.php/AnaliseEconomica/article/view/72204
• topic: Monetary policy; Crawling peg; Inflation targeting; VAR; Brazil; E52; E32; Política monetária; Câmbio administrado; Metas para a Inflação; VAR; Brasil; E52; E32

In this paper, we evaluate the macroeconomic performance of monetarypolicy conduction under the crawling peg (CP) and inflation targeting (IT) in Brazil, bothimplemented after the Real Plan. In order to do so, we estimate several autoregressive (VAR)regressions with monthly data in the 1995-2014 period. Our findings show that during thecrawling peg system (1995 to June-1999), the monetary authority was not able to affectinflation in the country. Interest rate innovations had no significant impacts on prices, andhighly recessive effects on output. After the inflation targeting implementation (July-1999to 2014), we verify that policy rate shocks reduced output, consumer prices inflation, and inflation expectations. However, between 2010 and 2014 specifically, monetary policylost much of its effectiveness. Thus, we conclude that inflation targeting has improved theoutcomes of monetary policy in Brazil, but such result depends crucially on the commitmentof the Central Bank with the fundamentals of this framework.