Implementing inflation targeting in Brazil: an institutional analysis

Strachman, Eduardo (2009): Implementing inflation targeting in Brazil: an institutional analysis.

Abstract

The paper shows the advantages and handicaps of implementing an inflation target (IT) regime, from a Post-Keynesian and, thus, an institutional stance. It is Post-Keynesian as long as it does not perceive any benefit in the mainstream split between monetary and fiscal policies. And it is institutional insofar as it assumes that there are several ways of implementing a policy, such that the chosen one is determined by historical factors, as it is illustrated by the Brazilian case. One could even support IT policies if their targets were seen just as “focusing devices” guiding economic policy, notwithstanding other targets, as, in the short run, output growth and employment and, in the long run, technology and human development. Nevertheless, an IT is not necessary, although it can be admitted, mainly if the target is hidden from the public, in order to increase the flexibility of the Central Bank.

• Item Type: MPRA Paper
• Language: English
• Keywords: Brazil; Inflation; Inflation Targeting; Monetary Policy; Economic Policy; Central Bank
• Subjects: E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E58 - Central Banks and Their Policies; E - Macroeconomics and Monetary Economics > E4 - Money and Interest Rates > E42 - Monetary Systems ; Standards ; Regimes ; Government and the Monetary System ; Payment Systems; E - Macroeconomics and Monetary Economics > E3 - Prices, Business Fluctuations, and Cycles > E31 - Price Level ; Inflation ; Deflation; N - Economic History > N1 - Macroeconomics and Monetary Economics ; Industrial Structure ; Growth ; Fluctuations > N16 - Latin America ; Caribbean; E - Macroeconomics and Monetary Economics > E5 - Monetary Policy, Central Banking, and the Supply of Money and Credit > E52 - Monetary Policy

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