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

• Main Author: André de Melo Modenesi
• Format: Article
• Language: English
• Published: Editora 34 2011-09-01
• Series: Brazilian Journal of Political Economy
• Subjects: Taylor rule; Selic; conservatism
• Online Access: http://www.scielo.br/scielo.php?script=sci_arttext&pid=S0101-31572011000300006&lng=en&tlng=en

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.