Inflation Targeting and Inflation Risk in Latin America

Frascaroli, Bruno Ferreira; Nobrega, Wellington Charles Lacerda

doi:10.1080/1540496x.2018.1514297

Cited by 10 publications

(9 citation statements)

References 52 publications

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“…It was observed that the period that was associated with the announcement of IT recorded a statistically significant reduction in the level of inflation. Such findings were consistent with Vegaa and Winkelried [22] and Frascaroli, and Nobrega, [14], where in a critical perspective and under the differenced in difference estimator, a carefully chosen set of industrialized and emerging economies were analyzed and it became evident that IT has helped in reducing the level and volatility of inflation in the countries that adopted it. The findings of Neumann and von Hagen [23] are however contrary to that of Johnson [21], Vegaa and Winkelried [22] and Frascaroli, and Nobrega, [14].…”

Section: Relationship Between Inflation Targeting Inflation and Infla...supporting

confidence: 86%

“…Such findings were consistent with Vegaa and Winkelried [22] and Frascaroli, and Nobrega, [14], where in a critical perspective and under the differenced in difference estimator, a carefully chosen set of industrialized and emerging economies were analyzed and it became evident that IT has helped in reducing the level and volatility of inflation in the countries that adopted it. The findings of Neumann and von Hagen [23] are however contrary to that of Johnson [21], Vegaa and Winkelried [22] and Frascaroli, and Nobrega, [14]. In their study, Neumann and von Hagen (2002) considered a group of six industrialized IT countries and three non-IT countries under an event study to measure the response of inflation and long run as well as short-run interest rates to supply shocks.…”

Section: Relationship Between Inflation Targeting Inflation and Infla...supporting

confidence: 86%

“…The findings of these studies [10,11,12,13] perhaps might have been the focal point for the growing numbers in countries and economies adopting the policy framework. Bufman, Leiderman and Sokoler [10] and Frascaroli, and Nobrega, [14] investigated the experiences some inflation targeters. The findings therein demonstrated that the policy framework contributed greatly to the reduction and management of inflation and inflation risk.…”

Section: Relationship Between Inflation Targeting Inflation and Infla...mentioning

confidence: 99%

See 2 more Smart Citations

The Unique Adoption of Inflation Targeting Monetary Policy: Lessons from an Emerging Economy

Achiyaale

Mbilla

Feruta

et al. 2022

AJEBA

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Purpose: The purpose of this study was to examine the extent to which formal announcement of inflation targeting impacts on inflation and inflation volatility, from an emerging economy’s perspective. Methodology: Annual time series data from 1985 to 2014, which was sourced from the World Development Indicators (WDI) and the Bank of Ghana (BoG) was used. The data was interpolated into quarterly data using E-Views. The GARCH (1 1) and AR 2-Newey West Models were employed. Findings: The study found that the formal announcement of inflation targeting had a significant negative impact on inflation and its volatility. Thus, the study discovered that research works arguing that inflation targeting has no beneficial influence on inflation must take into account the type of economic structure at play, policy credibility, institutional efficiency, and the general public's responsiveness to institutional policies and information. Implications: This scholarly work would aid policy makers, academic institutions and the understanding of the general public in matters of inflation targeting. This paper concludes that the formal announcement of inflation targeting contributes greatly to stabilize both the inflation rate and inflation volatility, and that, countries that adopt a piloting-based adoption will not achieve the gains of the policy framework within the piloting period.

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Section: Relationship Between Inflation Targeting Inflation and Infla...supporting

confidence: 86%

Section: Relationship Between Inflation Targeting Inflation and Infla...supporting

confidence: 86%

Section: Relationship Between Inflation Targeting Inflation and Infla...mentioning

confidence: 99%

See 1 more Smart Citation

The Unique Adoption of Inflation Targeting Monetary Policy: Lessons from an Emerging Economy

Achiyaale

Mbilla

Feruta

et al. 2022

AJEBA

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“…Divino (2018) showed that IT promotes no harm to the economy of developing and emerging economics. Ferreira and Lacerda (2019) confirmed that IT can lower inflation risk in Latin American economies that adopt IT.…”

Section: It Policymentioning

confidence: 68%

Why is inflation targeting adopted?

Kurihara

2020

RAE

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Since the early 1990s, inflation targeting (IT) has been conducted in many countries and the number of the countries has been increasing rapidly. The outcomes of adopting IT has been discussed, however, the incentives of adopting IT is not fully examined. This study focuses on this issue empirically. The results are clearly divided into two types of countries. In developed countries, budget/GDP ratio, central bank credibility, exchange rate stability, and openness of the economy are deterministic elements of adopting IT, however interestingly, inflation itself does not play any roles of adopting IT. On the other hand, only inflation is the deterministic element of adopting IT in developing countries. Other elements, that are deterministic elements in developed countries, do not any effects on introducing IT. Moreover, countries would not like to limit the scope of policies when the economy’s openness is high.

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“…Regarding the deterioration of public accounts, according to Pastore et al (2014), in the early stages of the 2010 decade, there was a regime change in economic policy that, in practice, consisted of abandoning the macroeconomic tripod. In this sense, Frascaroli and Nobrega (2019) argue that the political cycle had a negative impact on economic decisions. Furthermore, de Jesus et al (2020) highlight that the combination of a reduction in economic activity and in tax revenues contributed to the growth of the budget deficit, which has deteriorated substantially from 2011 to the present day.…”

Section: Conjecture Of Public Debt In Brazilmentioning

confidence: 99%

Public debt management and the interaction between fiscal and monetary policies

Nobrega

Besarria

Aragón

2021

JES

Self Cite

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PurposeThis paper aims to investigate the existing relations between the management of public bonds on the dynamics of debt, term structure of interest rates and economic cycle, through a dynamic stochastic general equilibrium model (DSGE), which was estimated through Bayesian inference techniques using data from Brazil.Design/methodology/approachThe model developed was used to investigate the effects of the public debt average maturity management when the economy faces a monetary policy shock. For this, three management scenarios are evaluated, including Brazilian securities average term.FindingsContrary to what might be inferred from DSGE models that limited the analysis of the debt term by imposing only one-period bonds, a contractionary monetary policy shock does not necessarily cause public debt to increase significantly. Debt term structure plays a crucial role in this result since the government does not need to roll the debt over at higher costs when the debt term profile is longer, reducing the debt service costs and then the impact on the overall debt.Originality/valueDespite the relevance of this theme and its implications for the dynamics of the economy, there is still a gap to be filled in the literature when using DSGE models, since most part of the work that used this methodology limited the analysis of the debt term by imposing that government issues only one-period bonds. This paper differs from the others insofar as it promotes an investigation focused on the role played by debt maturity management on the performance of the contractionary monetary policy. This approach can generate a better understanding of debt management policy and its interaction with fiscal and monetary policies.

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Inflation Targeting and Inflation Risk in Latin America

Cited by 10 publications

References 52 publications

The Unique Adoption of Inflation Targeting Monetary Policy: Lessons from an Emerging Economy

The Unique Adoption of Inflation Targeting Monetary Policy: Lessons from an Emerging Economy

Why is inflation targeting adopted?

Public debt management and the interaction between fiscal and monetary policies

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