Inflation targeting in an open financially integrated emerging economy: the case of Brazil
DOI:
https://doi.org/10.1590/S0101-41612004000200002Keywords:
pass-through, floating exchange rate, Taylor ruleAbstract
This paper conducts simulations of the augmented Taylor rule (with an added exchange rate term). It has also been made to analyze the response from external shocks in a simple Inflation Targeting model with trade balance equations. In contrast to Ball (2000), when the exchange rate is included in the Taylor rule, output volatility increases after a negative shock to the capital inflow. The paper also studies the pass-through from the exchange rate devaluation to inflation considering the recent change in the foreign exchange regime in Brazil. Econometric estimations were performed using the specifications of the pass-through suggested by Goldfajn and Werlang (2000).Downloads
References
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RODRICK, Dani. Exchange rate regimes and institutional arrangements in the shadow of capital flows. Kennedy School of Government, Harvard University, 2000. Mimeografado.
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Copyright (c) 2004 Marcelo Kfoury Muinho
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