Effect of monetary policy credibility on the fear of floating: Evidence from Brazil |
| |
| Affiliation: | 1. Fluminense Federal University, Department of Economics, National Council for Scientific and Technological Development (CNPq), Rua Alexandre Moura, Bloco F, 8, São Domingos, Niterói, RJ, 24210-200, Brazil;2. Fluminense Federal University, Department of Economics, Brazil;1. Business School of Xiangtan University, Yangkutang Street, Yuhu District, Xiangtan City, Hunan Province 411105, China;2. Facultad de Estudios Estadísticos, Universidad Complutense de Madrid, Avda. Puerta de Hierro s/n, Ciudad Universitaria, 28040 Madrid, Spain;1. Area of Finance and Strategy, T A Pai Management Institute, Manipal, Karnataka, India;2. Department of International Business, Chung Hua University, Hsinchu, Taiwan, R.O.C |
| |
| Abstract: | Based on the argument that monetary policy credibility can reduce the fear of floating (FF), we analyze this hypothesis for Brazil. Since expectations play a key role under Inflation Targeting, we also analyze whether credibility can affect the expectations of financial markets about the FF of the Central Bank. The results show credibility can reduce the FF, and financial markets expect less intervention by the Central Bank when credibility is higher. Thus, policymakers must pay attention to the credibility of their policies, otherwise they may be misinterpreted regarding both the goals they pursue and how they conduct monetary policy. |
| |
| Keywords: | Fear of floating Credibility Monetary policy Exchange rate |
| 本文献已被 ScienceDirect 等数据库收录！ |
|
