Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests

Detalhes bibliográficos
Autor(a) principal: Ferrari Filho, Fernando
Data de Publicação: 2018
Outros Autores: Milan, Marcelo
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Repositório Institucional da UFRGS
Texto Completo: http://hdl.handle.net/10183/201227
Resumo: Brazil has had, since the middle 1990s, one of the highest real interest rates in the world, yet not one of the lowest inflation rates. By the end of that decade, an inflation targeting regime (ITR) was introduced. Real interest rates have remained extremely high for international standards, while macroeconomic performance has been dismal on the same grounds. This article argues that these results can be explained by, among others reasons, pressures from the rentiers to frame monetary policy in a way to sustain very high interest earnings in a context where inflation is not very sensitive to monetary policy instruments. Under the ITR, the interest rate seems to have been kept above what would be required to maintain low inflation under normal conditions (even if one assumes a demand-pull inflation, which is not necessarily the case), with a potentially negative impact on growth and employment. This is interpreted as an indicator of monetary policy ineffectiveness. On the empirical ground, this article compares interest rate, inflation, unemployment, and real output growth for Brazil with both ITR and non-ITR countries selected by judgment sampling.
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spelling Ferrari Filho, FernandoMilan, Marcelo2019-11-02T03:51:10Z20182332-7308http://hdl.handle.net/10183/201227001086427Brazil has had, since the middle 1990s, one of the highest real interest rates in the world, yet not one of the lowest inflation rates. By the end of that decade, an inflation targeting regime (ITR) was introduced. Real interest rates have remained extremely high for international standards, while macroeconomic performance has been dismal on the same grounds. This article argues that these results can be explained by, among others reasons, pressures from the rentiers to frame monetary policy in a way to sustain very high interest earnings in a context where inflation is not very sensitive to monetary policy instruments. Under the ITR, the interest rate seems to have been kept above what would be required to maintain low inflation under normal conditions (even if one assumes a demand-pull inflation, which is not necessarily the case), with a potentially negative impact on growth and employment. This is interpreted as an indicator of monetary policy ineffectiveness. On the empirical ground, this article compares interest rate, inflation, unemployment, and real output growth for Brazil with both ITR and non-ITR countries selected by judgment sampling.application/pdfengApplied Economics and Finance. Beaverton, USA. Vol. 5, n.6 (Nov. 2018), p. 84-100Política monetáriaInflaçãoTaxa de jurosExcess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interestsEstrangeiroinfo:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersioninfo:eu-repo/semantics/openAccessreponame:Repositório Institucional da UFRGSinstname:Universidade Federal do Rio Grande do Sul (UFRGS)instacron:UFRGSTEXT001086427.pdf.txt001086427.pdf.txtExtracted Texttext/plain75609http://www.lume.ufrgs.br/bitstream/10183/201227/2/001086427.pdf.txt46353b285a6544b42d89c1a86f8c5c49MD52ORIGINAL001086427.pdfTexto completo (inglês)application/pdf573467http://www.lume.ufrgs.br/bitstream/10183/201227/1/001086427.pdf770fdecd0c958c30c7ffadb3d82ba92bMD5110183/2012272021-05-07 04:36:49.815836oai:www.lume.ufrgs.br:10183/201227Repositório de PublicaçõesPUBhttps://lume.ufrgs.br/oai/requestopendoar:2021-05-07T07:36:49Repositório Institucional da UFRGS - Universidade Federal do Rio Grande do Sul (UFRGS)false
dc.title.pt_BR.fl_str_mv Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
title Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
spellingShingle Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
Ferrari Filho, Fernando
Política monetária
Inflação
Taxa de juros
title_short Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
title_full Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
title_fullStr Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
title_full_unstemmed Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
title_sort Excess real interest rates and the inflation targeting regime in Brazil : monetary policy ineffectiveness and rentiers‟ interests
author Ferrari Filho, Fernando
author_facet Ferrari Filho, Fernando
Milan, Marcelo
author_role author
author2 Milan, Marcelo
author2_role author
dc.contributor.author.fl_str_mv Ferrari Filho, Fernando
Milan, Marcelo
dc.subject.por.fl_str_mv Política monetária
Inflação
Taxa de juros
topic Política monetária
Inflação
Taxa de juros
description Brazil has had, since the middle 1990s, one of the highest real interest rates in the world, yet not one of the lowest inflation rates. By the end of that decade, an inflation targeting regime (ITR) was introduced. Real interest rates have remained extremely high for international standards, while macroeconomic performance has been dismal on the same grounds. This article argues that these results can be explained by, among others reasons, pressures from the rentiers to frame monetary policy in a way to sustain very high interest earnings in a context where inflation is not very sensitive to monetary policy instruments. Under the ITR, the interest rate seems to have been kept above what would be required to maintain low inflation under normal conditions (even if one assumes a demand-pull inflation, which is not necessarily the case), with a potentially negative impact on growth and employment. This is interpreted as an indicator of monetary policy ineffectiveness. On the empirical ground, this article compares interest rate, inflation, unemployment, and real output growth for Brazil with both ITR and non-ITR countries selected by judgment sampling.
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dc.relation.ispartof.pt_BR.fl_str_mv Applied Economics and Finance. Beaverton, USA. Vol. 5, n.6 (Nov. 2018), p. 84-100
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