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The Relationship of Monetary and Fiscal Policy Credibility with the Stock Market Volatility in a Developing Country

Author

Listed:
  • Vinícius Medeiros Magnani
  • Antonio Daniel Ricardo Caluz
  • Rafael Confetti Gatsios
  • Fabiano Guasti Lima

Abstract

The present study aims to analyse the relationship between fiscal and monetary credibility and the volatility of the Brazilian stock market index, Ibovespa. The results demonstrate that the greater the credibility of the target imposed by the Brazilian Central Bank, the more predictable and stable are the macroeconomic variables and the greater the confidence of economic agents in the Brazilian stock market. We can conclude that the greater the fiscal and monetary credibility, the better is the performance of the stock market.

Suggested Citation

  • Vinícius Medeiros Magnani & Antonio Daniel Ricardo Caluz & Rafael Confetti Gatsios & Fabiano Guasti Lima, 2025. "The Relationship of Monetary and Fiscal Policy Credibility with the Stock Market Volatility in a Developing Country," Global Business Review, International Management Institute, vol. 26(1), pages 55-68, February.
    • Handle: RePEc:sae:globus:v:26:y:2025:i:1:p:55-68
    DOI: 10.1177/0972150920982513
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