IDEAS home Printed from https://ideas.repec.org/a/mes/postke/v45y2022i4p612-635.html
   My bibliography  Save this article

The effect of expectations on the Brazilian Central Bank’s policy rate

Author

Listed:
  • Fábio Henrique Bittes Terra
  • Cleomar Gomes

Abstract

This article investigates how expectations influence the determination of the Brazilian benchmark interest rate based on Keynes’ views on the relationship between expectations and monetary policy. Then, as empirical methodology, Autoregressive Distributed Lag Models and Bounds Testing Approach to Cointegration are used to study, in the short and long-run, the connection between expectations and central bank interest rate. For the period from 2001Q3 to 2017Q4, results show that in the long-run business and consumer confidence, as well as expectations related to market interest rates, GDP, inflation and exchange rate play an important role on monetary policy actions. In the short-run, business and consumer confidence lose importance, while the other mentioned expectations are still statistically significant. The findings of the paper lend credence to Keynes’s view on the relation between expectation and money policy in Brazil.

Suggested Citation

  • Fábio Henrique Bittes Terra & Cleomar Gomes, 2022. "The effect of expectations on the Brazilian Central Bank’s policy rate," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 45(4), pages 612-635, October.
    • Handle: RePEc:mes:postke:v:45:y:2022:i:4:p:612-635
    DOI: 10.1080/01603477.2022.2110121
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1080/01603477.2022.2110121
    Download Restriction: Access to full text is restricted to subscribers.
    File URL: https://libkey.io/10.1080/01603477.2022.2110121?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    More about this item

    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:mes:postke:v:45:y:2022:i:4:p:612-635. 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: Chris Longhurst (email available below). General contact details of provider: http://www.tandfonline.com/MPKE20 .

    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.