The Impact of the 2007-2009 Financial Crisis on the Relationship between Central Bank Rates and the Corresponding Interbank Interest Rates in 2002-2014

The role of central banks throughout the global financial system has become even more important during and after the events of the financial crisis. In order to stabilize the market conditions and provide solid ground for future development, the central banks use discount rate as their primary monetary policy tool in many developed and emerging economies. The purpose of this thesis is to examine how the relationship between central bank rates and corresponding interbank rates has developed before, during and after the crisis period of 2007-2009 in five developed countries and five emerging market countries. The results indicate that during the before-crisis period the interest rate markets reacted diversely but the joint recovery attempts of global economies seem to have stabilized the reactions during and especially after the crisis. The crisis also seems to have highlighted the characteristics of each country’s survival strategy as the role of other policy instruments arose.

Uma contribuição ao debate em torno da eficácia da política monetária e algumas implicações para o caso do Brasil

A contribution to the debate on the efficacy of monetary policy and some implications in the case of Brazil. The main opposition between Keynesian and Classic monetary theories is defined by the former's proposition of money non-neutrality in the long period. According to Keynes, it is not possible to describe a monetary economy's long period position without first specifying the monetary policy it is adopting. The policy is described by the choice of the short-term interest rate which exerts an important determining influence on the long term rate and, therefore, on real investment decisions. Based on this reasoning, inflation target monetary policy regimes are criticized, in particular the one adopted in post-1999 balance of payments crisis Brazil because of its deleterious impact on investment and growth.

Transparência: Bacen versus BoE

Transparency: Bacen versus BoE. The aim of this paper is to compare the degree of transparency of the Brazilian Central Bank (Bacen) with the one verified in the Bank of England (BoE). In order to accomplish this objective, an indicator of transparency is built based on the information that each central bank provides to the public about its monetary policy, its expectation about the future of the economy, its intervention in the financial market, and if there are clear limits and restrictions to the release of information to the general public. The analysis suggests that the Bacen is less transparent and has a less individualistic Monetary Policy Committee in comparison with the BoE. Moreover, it indicates some procedures that could be adopted by the Bacen in order to make its monetary policy more transparent.

Renegociação da dívida pública interna em condições de sobreendividamento

Renegotiation of the public debt in conditions of excessive debt. This paper studies the debt overhang models and maturity management models, and analyses both theoretically and historically the debt renegotiations which the final outcome is a lower public debt burden. From the theoretical view the renegotiation plans can be Pareto improving, both creditors and debtors can be better-off, and the value of the new debt will price the new reputation and debtors' willingness to pay. From the historical point of view, funded debts were the instrument that debtors used to improve reputation.

Independência do banco central e equilíbrio fiscal: algumas observações para o caso brasileiro

The objective of this paper is to analyze the main theoretical arguments for the analysis of the conduction of monetary policy on the fiscal side. Besides this, an analysis is made of the possible effects on the fiscal balance from the conduction of the monetary policy in the search for price stability after the Real Plan and due to an increase in the central bank independence (CBI) in the Brazilian case. The findings denote that the strategy for the conduction of the adopted monetary policy and the increase in the degree of CBI did not contribute to an imrovement in the fiscal balance.

New-consensus macroeconomic governance in a Keynesian world, and the Keynesian alternative

The paper presents both the New Consensus and Keynesian equilibrium within the usual four competitive macro-markets structure. It gives theoretical explanations of the pernicious effects that the NCM governance, which has been designed for ergodic stationary regimes, brings about in Keynesian non-ergodic regimes. It put forward Keynesian principles of governance which include monetary, budgetary and fiscal instruments, and suggest new directions for the positive and normative analysis of macro-policies.

Um modelo macrodinâmico pós-keynesiano de simulação

A post-keynesian macro-dynamic model of simulation. The objective of this article is to present the structure and the simulation results of a one-sector macro-dynamic model that embeds some elements of the post-keynesian theory. The computational simulation of the model replicates some important features of capitalist dynamics as the phenomenon of cyclical growth, the long-run stability of the profit rate and functional distribution of income, the maintenance of idle-capacity in the long-run and the occurrence of a single episode of deep fall in real economic activity, which is in accordance with the rarity character of great crashes in the history of capitalism. Moreover, the simulation results show that a great reduction in inflation rate will be followed by an increase of financial fragility, increasing the like-hood of a great depression. As a policy advice derived from the simulation results, we can state that the Central Bank should never promote big reductions in inflation rate.

Para superar el estancamiento económico en México: "nudos críticos" de un proyecto nacional de desarrollo

This article is devoted to analyze changes in economic policy to be adopted by Mexico if a national development project were implemented. Starting from an evaluation of the main economic and political outcomes of Vicente’s Fox administration, the author proposes an alternative development strategy which permits Mexico to overcome economic stagnation. That strategy would be based in recovering the internal market as the dynamical focus of the economy with the purpose of satisfying basic needs of people. To be successful this strategy should to confront the "critical knots" of the Neo-liberal model: to reverse the uneven distribution of income; abandoning the fixing of restrictive monetary, fiscal and exchange rate policies; and mobilizing economic surplus by means of a profound revision of debt service schemes. It concludes that to implement a national development project it is required a political and economic strategy to dismantle neoliberalism, which is an antinational structure of power.

Uma análise da proposta de déficit nominal zero

The aim of this paper is to evaluate the relationship between fiscal deficits and interest rate in Brazil. An adaptation of Taylor’s Rule is tested and the data confirmed this relationship. Furthermore, evidence from a loanable funds model shows that a lower deficit can bring interest rate down. However, policy coordination is a key feature in this process.

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.

Fluxos de capitais, fragilidade externa e regimes cambiais: uma revisão teórica

Capital Flows, External Fragility and Currency Regimes: A Theoretical Review. The major integration and deregulation of the international financial markets increased the degree of interdependence and risk of incompatibility between the financial and monetary policy adopted by different countries. The consequences of these facts are the financial instability and the currency crisis. In this article we develop arguments advocating that independent of the currency regime adopted the national policy makers should take into account, between other factors, the major capital mobility and the integrations of markets. One of the corollaries of our analyses is that countries should pursue policies that reduces the degree of short-term capital volatile by the adoption of capital controls or though measures of prudential supervision.

Rethinking the economics of capital mobility and capital controls

This paper reexamines the issue of international financial capital mobility, which is today's economic orthodoxy. Discussion is often framed in terms of the impossible trinity. That framing distorts discussion by representing capital mobility as having equal significance with sovereign monetary policy and control over exchange rates. It also distorts discussion by ignoring possibilities for coordinated monetary policy and exchange rates, and for managed capital flows. The case for capital mobility rests on neo-classical economic efficiency arguments and neo-liberal political arguments. The case against capital mobility is based on Keynesian macroeconomic inefficiency arguments, neo-Walrasian market failure arguments, and neo-Marxian arguments regarding distortion of the social structure of accumulation. Close examination shows the case for capital mobility to be extremely flimsy, pointing to the ideological dimension behind today's policy orthodoxy.

Metas de inflação, política monetária e investimento: um estudo para dezessete países

In this paper two hypotheses about the relationship between monetary policy and investment in the context of the inflation target system were tested. One of these hypotheses is based on the idea of neutrality of money, and the other hypothesis is based on the reject of that idea. An investment equation for seventeen economies using a piece-wise dummy variable was estimated by the Methodology of Panel Data. The results highlight that a negative correlation between current expectation of restrictive monetary policy and current investment rose after the inflation target system implementation.

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.

Endividamento público, crescimento, moeda e inflação: comentário a "Matemática agradável", de Gerson Lima

The paper aims at analyzing the article by Gerson Lima on the manner by which fiscal deficit should be covered. It presents a more general dynamic model, where the principle of effective demand is explicitly used. By doing that, it is possible to treat as endogenous variables the national income and the government entries, what brings the result that the public debt must not follow an explosive path unless the very restrictive conditions of Lima's paper prevail. It also evaluates Lima's implicit inflation theory, and argues against his approximation to Friedman's framework.