HAS THE BRAZILIAN MONETARY POLICY INCREASED ITS INERTIA DEGREE? EVIDENCES FROM AN ECONOMETRIC INVESTIGATION

Abstract

By adopting the approach of monetary policy rules, a review on theempirical literature for Brazil and an econometric investigation from Jan/2005to Jul/2012, this article obtain evidence suggesting an increasing of theinertial degree regarding Selic rate changes, in comparison with estimation ofprevious works. We argue that an excessive gradualism of the Brazilian monetarypolicy would reduce the inflation targeting regime’s efficiency as it wouldmake more difficult the observed inflation’s convergence to the announcedtarget