Real Interest Rate Targeting: An Example From Brazil
December 1, 1990
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Summary
This paper examines a real interest rate targeting procedure based on lagged inflation similar to the policy followed by the Brazilian monetary authorities during the period November 1986 to December 1988, focusing on the issue of the determinacy of the price level. For the specific model examined, the analysis suggests that such a targeting procedure would not suffer from the frequently noted defect of nominal interest rate targeting rules of leaving the conditional expectation of the next period price level undetermined.
Subject: Financial services, Inflation, Interest rate policy, Monetary policy, Prices, Real interest rates
Keywords: government securities market, Inflation, interest rate, Interest rate policy, interest rate rule, period price level, policy rule, real interest rate policy, Real interest rates, target rule, targeting procedure, WP
Pages:
26
Volume:
1990
DOI:
Issue:
111
Series:
Working Paper No. 1990/111
Stock No:
WPIEA1111990
ISBN:
9781451945041
ISSN:
1018-5941
