IDEAS home Printed from https://ideas.repec.org/a/anp/econom/v14y2013i2158_170.html
   My bibliography  Save this article

New macroeconomic consensus and inflation targeting: Monetary Policy Committee directors’ turnover in Brazil

Author

Listed:
  • Maria Helena Ambrosio Dias

    (State University of Maringá (UEM), Brazil)

  • Anderson Mutter Teixeira

    (Federal University of Goias (FACE/UFG), Brazil)

  • Joilson Dias

    (State University of Maringá (UEM), Brazil)

Abstract

The main objective of this paper is to estimate a Central Bank reaction function that accounts for the effects of directors’ rotation of the Brazilian COPOM (Monetary Policy Committee). The reaction function proposed is assumed to be the mechanism for inflation targeting policy. It accounts for the COPOM rotation to examine COPOM's policy credibility. The empirical analysis use monthly data from 2001 to 2008 to estimate a structural vector auto-regression (SVAR) in order to learn about the long run effects. The SVAR results suggest that the turnover of the COPOM board of directors affects inflation expectation and interest rate of the Brazilian economy in the long run. This means that the turnover causes economic agents to increase their expectations about inflation, resulting in increases of the rate of change of the interest rate level. This break in credibility leads to an additional cost to society through higher future interest rates to be paid by government bonds.

Suggested Citation

  • Maria Helena Ambrosio Dias & Anderson Mutter Teixeira & Joilson Dias, 2013. "New macroeconomic consensus and inflation targeting: Monetary Policy Committee directors’ turnover in Brazil," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 14(3–4), pages 158-170.
    • Handle: RePEc:anp:econom:v:14:y:2013:i:2:158_170
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1517758013000118/pdfft?md5=8cbdcf58fa5fa8ca45ef86e7f466eca9&pid=1-s2.0-S1517758013000118-main.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Helder Ferreira Mendonça & André Filipe Guedes Almeida, 2019. "Importance of credibility for business confidence: evidence from an emerging economy," Empirical Economics, Springer, vol. 57(6), pages 1979-1996, December.

    More about this item

    Keywords

    Monetary policy; New consensus macroeconomics; Interest rates; Central Bank;
    All these keywords.

    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies

    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:anp:econom:v:14:y:2013:i:2:158_170. See general information about how to correct material in RePEc.

    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 bibliographic 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.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rodrigo Zadra Armond (email available below). General contact details of provider: https://edirc.repec.org/data/anpecea.html .

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

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.