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Inflation targeting in Brazil: 1999-2006

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  • Nelson Barbosa-Filho

Abstract

This paper describes the Brazilian experience with inflation targeting in 1999-2006. The data presented in the paper show that inflation targeting managed to reduce inflation in Brazil after its 1999 and 2002 currency crises, with a substantial help of exchange-rate appreciation. The data also show that economic growth was slow under inflation targeting than during exchange-rate targeting in Brazil, but with a smaller volatility and an apparent upward trend during inflation targeting than during exchange-rate targeting. The paper also shows that inflation targeting reduced the real interest rate of the economy, which nevertheless remained well above international standards and more than three times higher than the Brazilian gross domestic product growth rate.

Suggested Citation

  • Nelson Barbosa-Filho, 2008. "Inflation targeting in Brazil: 1999-2006," International Review of Applied Economics, Taylor & Francis Journals, vol. 22(2), pages 187-200.
    • Handle: RePEc:taf:irapec:v:22:y:2008:i:2:p:187-200
    DOI: 10.1080/02692170701880684
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    1. Joel Bogdanski & Alexandre Antonio Tombini & Sergio R. Da C. Werlang, 2001. "Implementing Inflation Targeting in Brazil," Money Affairs, CEMLA, vol. 0(1), pages 1-23, January-J.
    2. Roberto Frenkel & Lance Taylor, 2006. "Real Exchange Rate, Monetary Policy and Employment," Working Papers 19, United Nations, Department of Economics and Social Affairs.
    3. Minella, Andre & de Freitas, Paulo Springer & Goldfajn, Ilan & Muinhos, Marcelo Kfoury, 2003. "Inflation targeting in Brazil: constructing credibility under exchange rate volatility," Journal of International Money and Finance, Elsevier, vol. 22(7), pages 1015-1040, December.
    4. Alexandre A. Tombini & Sergio A. Lago Alves, 2006. "The Recent Brazilian Disinflation Process and Costs," Working Papers Series 109, Central Bank of Brazil, Research Department.
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