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Inflation targets, monetary policy and investment: a study for seventeen countries

Author

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  • Luis Alberto Pelicioni
  • Marco Flávio da Cunha Resende

Abstract

In this paper two hypotheses about the relationship between monetary policy and investment in the context of the inflation target system were tested. One of these hypotheses is based on the idea of neutrality of money, and the other hypothesis is based on the reject of that idea. An investment equation for seventeen economies using a piece-wise dummy variable was estimated by the Methodology of Panel Data. The results highlight that a negative correlation between current expectation of restrictive monetary policy and current investment rose after the inflation target system implementation. JEL Classification: E12; E13; E22;E52.

Suggested Citation

  • Luis Alberto Pelicioni & Marco Flávio da Cunha Resende, 2009. "Inflation targets, monetary policy and investment: a study for seventeen countries," Brazilian Journal of Political Economy, Center of Political Economy, vol. 29(3), pages 71-92.
    • Handle: RePEc:ekm:repojs:v:29:y:2009:i:3:p:71-92:id:487
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    More about this item

    Keywords

    inflation target; monetary policy; investment;
    All these keywords.

    JEL classification:

    • E12 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Keynes; Keynesian; Post-Keynesian; Modern Monetary Theory
    • E13 - Macroeconomics and Monetary Economics - - General Aggregative Models - - - Neoclassical
    • E22 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Investment; Capital; Intangible Capital; Capacity
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy

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