Optimal monetary rules: the case of Brazil

Within a dynamic programming approach, an optimal rule for the central bank to attain its inflation targeting goals is derived. The short-run nominal interest rate is used as an instrument to achieve monetary objectives. The model is tested for the Brazilian economy and compared with results found f...

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Bibliographic Details
Published inApplied economics letters Vol. 10; no. 5; pp. 299 - 302
Main Authors Almeida, Charles Lima De, Peres, Marco AuréLIO, Souza, Geraldo Da Silva E, Tabak, Benjamin Miranda
Format Journal Article
LanguageEnglish
Published Taylor & Francis Group 01.04.2003
Taylor and Francis Journals
SeriesApplied Economics Letters
Subjects
Applied economics
Brazil
Central banks
Comparative economics
Economics
Inflation controls
Interest rates
Monetary policy
Open economies
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Summary:Within a dynamic programming approach, an optimal rule for the central bank to attain its inflation targeting goals is derived. The short-run nominal interest rate is used as an instrument to achieve monetary objectives. The model is tested for the Brazilian economy and compared with results found for other countries. Evidence for the estimated feedback interest rule for the Central Bank suggests that the cost of reducing inflation in an open economy is lower than that of a closed economy.
Bibliography:ObjectType-Article-2
SourceType-Scholarly Journals-1
ObjectType-Feature-1
content type line 23
ISSN:1350-4851
1466-4291
DOI:10.1080/0003684032000066804