Um teste dos limites do poder da política monetária

Abstract

The purpose of this paper is to discuss the limits on the power of monetary policy inBrazilduring the 80’s and beginning of the90’or, more precisely, to demonstrate that during this period the choice between a loose or tight monetary policy was to a great extent illusory (Sargent and Wallace’s unpleasant arithmetic). The paper also tries to verify how illusory this choice is by determining the timing of revenue from money creation. The results indicate an elasticity of real money demand with respect to expected inflation close to zero. Therefore, the expectational demand for money becomes a simple version of the quantity theory of money. In this case, given the assumptions about the monetary regime and the rate of return on government bonds, the power of restrictive monetary policy to fight inflation is substantially reduced. Tight money can at most rearrange the timing of the inflation tax, resulting in a lower inflation today at the expense of a higher inflation rate in future.