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Revista Brasileira de Economia

Print version ISSN 0034-7140On-line version ISSN 1806-9134


MINELLA, André. Monetary policy and inflation in Brazil (1975-2000): a VAR estimation. Rev. Bras. Econ. [online]. 2003, vol.57, n.3, pp.605-635. ISSN 0034-7140.

This paper investigates monetary policy and basic macroeconomic relationships involving output, inflation rate, interest rate, and money in Brazil. Based on a vector autoregressive (VAR) estimation, it compares three different periods: moderately-increasing inflation (1975-1985), high inflation (1985-1994), and low inflation (1994-2000). The main results are the following: monetary policy shocks have significant effects on output; monetary policy shocks do not induce a reduction in the inflation rate in the first two periods, but there are indications that they have gained power to affect prices after the Real Plan was launched; monetary policy does not usually respond rapidly or actively to inflation-rate and output innovations; in the recent period, the interest rate responds intensely to financial crises; positive interest-rate shocks are accompanied by a decline in money in all the three periods; the degree of inflation persistence is substantially lower in the recent period.

Keywords : monetary policy; inflation; interest rate; money; Brazil.

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