A note on inflation targeting and economic growth in Brazil

This paper analyzes the relation between monetary policy and economic performance in Brazil during the period 1999-2006. In particular, it discusses the growth effects of the inflation targeting regime through its effects on aggregate demand. It is argued that monetary policy under IT reacts in a procyclical and asymmetric way to fluctuations in economic activity (too "tight" during recessions, not so "loose" during expansions). Such pattern may generate a downward bias in aggregate demand, with negative real effects on output growth and employment. Our results suggest that monetary policy has been procyclical and asymmetrical in Brazil under inflation targeting. The main economic policy implication of this study is that central banks should consider more seriously the real effects of monetary policy on output and employment.

Uncertainties, monetary policy and financial stability: challenges on inflation targeting

This work aims at presenting the challenges that inflation targeting central banks may face since uncertainties represent a harmful element for the effectiveness of monetary policy, and since financial instabilities may disturb the transmission mechanisms - in particular, the expectation channel - and thus the economic stability. Financial stability must not be considered as a simple goal of monetary policy, but a precondition for central banks operate their policies and reach the goals of inflation and output stability. The work identifies different sources of uncertainties that surround central banks' decisions; and approaches the role that inflation targeting central banks should play according to some basic principles that can serve as useful guides for central banks to help them achieve successful outcomes in their conduct of monetary policy.

Alan Greenspan, the confidence strategy

To evaluate the Greenspan era, we nevertheless need to address three questions: Is his success due to talent or just luck? Does he have a system of monetary policy or is he himself the system? What will be his legacy? Greenspan was certainly lucky, but he was also clairvoyant. Above all, he has developed a profoundly original monetary policy. His confidence strategy is clearly opposed to the credibility strategy developed in central banks and the academic milieu after 1980, but also inflation targeting, which today constitutes the mainstream monetary policy regime. The question of his legacy seems more nuanced. However, Greenspan will remain 'for a considerable period of time' a highly heterodox and original central banker. His political vision, his perception of an uncertain world, his pragmatism and his openness form the structure of a powerful alternative system, the confidence strategy, which will leave its mark on the history of monetary policy.

Metas para inflação e taxa de juros no Brasil: uma análise do efeito dos preços livres e administrados

After surpassed more than half a decade since the adoption of inflation targeting in Brazil, it can be seen that maintaining a high interest rate is inherent to the strategy for the conduction of the monetary policy. The objective of this paper is to show that the present policy for defining the basic interest rate of the economy, based on the response to inflation considering both market and administered prices, is onerous for the Brazilian society. Based on findings from empirical evidence in the period 1999-2004, the adoption of a core inflation, a change in the time horizon for definition of targets, and, in common agreement between Banco Central do Brasil and National Treasury, a definition of these inflation targets, as a framework to increase efficiency of the monetary regime, creates possibilities for proposing a reduction on the Selic rate.

Metas inflacionárias: a análise convencional e um modelo alternativo

Inflation targeting: the conventional analysis and an alternative model. This article has two aims: the first one is to present a formal model of the monetary policy identified generally as "inflation targeting policy", an instrument of intervention of the central bank, through the short run nominal interest rate. The second aim is to discuss and criticize the theoretical assumptions of the model specially the concepts of "natural rate of interest" and of potential product presented by the "augmented Philips curve"; and to present a more realistic control of inflation targeting which does not assume the hypotheses above, and in which inflation targeting is based on the control of real rate of interest.

Metas de inflação: lições da era Greenspan

This paper approaches the experience of monetary policy in the Greenspan period and suggests what lessons could be learnt. The adoption of inflation targeting would denote a step backward in the policymaking process in the USA, for, since the 1980s, a distinctive feature is flexibility of response to adjust to unexpected events and changing environments. The Fed was able to exercise an informed judgement in critical situations and this opens the case for the importance of not restraining policymakers' actions through the adoption of tight rules. Furthermore, that the various experiences with inflation targeting are indisputably huge successes, and that this framework represents the state of the art (therefore nothing else can alternatively be done), remains to be seen.

Juros, câmbio e o sistema de metas de inflação no Brasil

Interest rate, exchange rate and the system of inflation target in Brazil. In the consensus view of the Brazilian system of inflation targeting, the core of inflation is due to demand shocks; the rate of interest is set to control demand; and some variation in the exchange rate happens as "collateral damage". In this note we argue that in reality core inflation comes from cost push; the interest rate affects the exchange rate; changes in the exchange rate affect costs and prices; it is the effect of interest rates on demand that is the "collateral damage" and that the long run anchor of the system is low average real wage rigidity.

Transparência do banco central: uma análise para o caso brasileiro

Central Bank transparency: an analysis of the Brazilian case. Nowadays there is a tendency among central banks of increasing transparency in the conduction of the monetary policy. After the adoption of inflation targeting in Brazil there was an increase in the communication of the Central Bank of Brazil with the public. This paper makes a brief review of the recent theoretical and empirical literature concerning this subject. Furthermore, an analysis due to the transparency in the conduction of Brazilian monetary policy on important macroeconomic variables is made. The findings denote that an increase in transparency improves the behavior of several macroeconomic variables.

Conservadorismo e rigidez na política monetária: uma estimativa da função de reação do BCB (2000-2007)

This paper aims at evaluating the conduction of monetary policy after the adoption of inflation targeting. Formation of Selic rate is modeled by estimating a reaction function of the BCB. Results show an excessive degree of interest rate smoothing and a high level of equilibrium interest rate. This evidence supports the belief that Selic rate's formation is ruled by a conservative behavior. The conservative conduction of monetary policy is related to two distinct features of BCB's reaction function: i) the great weight of autoregressive components; and, chiefly, ii) a very high level of the equilibrium interest rate. The main conclusion is that, all remaining unchanged, the interest rate would hardly be reduced in a satisfactory way. Massive and chronic deflation would be needed if Selic were to reach a reasonable level, closer to that of rates in the rest of the world. This evidences the need for a debate on the adequacy of current stabilization strategy.

The Banco Central do Brasil's institutional framework after ten years

The Banco Central do Brazil (BACEN) adopted inflation targeting in 1999. This monetary policy regime originates in institutional design which remains crucial today for the expectations management, and is in permanent evolution. After 10 years, the BACEN institutional framework is assessed, asking if there is still room for improvement. Various institutional procedures are analysed, and lessons are drawn from the international experience of a panel of sixteen countries. Some proposals for the BACEN institutional framework are made.

Metas de inflação, regra de Taylor e neutralidade da moeda: uma crítica pós-keynesiana

Inflation targeting, Taylor rule and money neutrality: a post-Keynesian critic. This paper critically discusses the inflation targeting regime proposed by orthodox economists, in particular the Taylor Rule. The article describes how the Taylor Rule assumes the argument of money neutrality inherited from the Quantitative Theory of Money. It discusses critically the ways of operation of the rule, and the negative impacts of the interest rate over the potential output. In this sense, the article shows the possible vicious circles of the monetary policy when money is not neutral, as is the case for post-keynesian economists. The relation of interest rates, potential output and the output gap is illustrated in some estimates using the methodology of Vector Auto-Regressive in the Brazilian case.

Convenções financeiras e a taxa básica de juros no Brasil: uma primeira aproximação

Financial conventions and basic interest rate in Brazil. This article discusses the thesis that the Brazilian interest rate is a convention, focusing on the basic interest rate under the inflation targeting regime. On the one hand, there are some complications involved in this debate. In order to show this, we consider the theoretical works that have been references for the Brazilian economists who see an interest rate convention in the country. On the other hand, despite the difficulties, it is possible to find signs of conventionality in the determination of the Brazilian basic rate, by analyzing two properties of conventions: conformity of some with the conformity of others; and arbitrariness.

Political conditions for successful inflation stabilization: comparing Brazil and Argentina

This study tries to understand how Brazil and Argentina, two countries with chronically high inflation, achieved permanent stabilization by looking at political factors necessary for stabilization. It suggests that, although state autonomy or political unity may contribute to successful price stabilization, reconciling the interests of different stakeholders and thereby building a broad political support base is more essential for stabilization to succeed. Political skills of the leaders and compensatory policies may help raise such support and they are more crucial where other political conditions are less favorable. Also, rapid improvement in the economy is important for sustained political support, and thus, for successful stabilization.

Influence of balloon pressure inflation in patients undergoing primary coronary stent implantation during acute myocardial infarction: a quantitative coronary angiography analysis

OBJECTIVE:To verify the influence of moderate- or high-pressure balloon inflation during primary coronary stent implantation for acute myocardial infarction. METHODS: After successful coronary stent implantation, 82 patients were divided into 2 groups according to the last balloon inflation pressure: group 1 (³12 to <16 atm) and group 2 (³16 to 20 atm), each with 41 cases. All patients underwent late coronary angiography. RESULTS: In group 1, the mean stent deployment pressure was 13.58±0.92 atm, and in the group 2 it was 18.15±1.66 atm. Stents implanted with moderate pressures (³12 to <16 atm) had a significantly smaller postprocedural minimal lumen diameter, compared to with those with higher pressure, with lesser acute gain (2.7± 0.4 mm vs 2.9±04 mm; p=0.004), but the late lumen loss (0,9±0,8 mm vs 0,9±0,6 mm) and the restenosis (22% vs. 17.1%) and target-vessel revascularization rates (9.8% vs 7.3%) were similar between the groups. CONCLUSION: During AMI stenting, the use of high pressures (³16 atm) did not cause a measurable improvement in late outcome, either in the late loss, its index, and the net gain, or in clinical and angiographic restenosis rates.

Chronic Trypanosoma cruzi-elicited cardiomyopathy: from the discovery to the proposal of rational therapeutic interventions targeting cell adhesion molecules and chemokine receptors - how to make a dream come true

One hundred years ago, Carlos Chagas discovered a new disease, the American trypanosomiasis. Chagas and co-workers later characterised the disease's common manifestation, chronic cardiomyopathy, and suggested that parasitic persistence coupled with inflammation was the key underlying pathogenic mechanism. Better comprehension of the molecular mechanisms leading to clinical heart afflictions is a prerequisite to developing new therapies that ameliorate inflammation and improve heart function without hampering parasite control. Here, we review recent data showing that distinct cell adhesion molecules, chemokines and chemokine receptors participate in anti-parasite immunity and/or detrimental leukocyte trafficking to the heart. Moreover, we offer evidence that CC-chemokine receptors may be attractive therapeutic targets aiming to regain homeostatic balance in parasite/host interaction thereby improving prognosis, supporting that it is becoming a non-phantasious proposal.