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Article
Publication date: 8 May 2017

Ronaldo Trogo de Almeida, Wilson Luiz Rotatori Corrêa, Helder Ferreira de Mendonça and José Simão Filho

This paper relates to the literature on central bank (CB) transparency and inflation uncertainty. Considering that opacity is a possible source for inflation uncertainty the…

Abstract

Purpose

This paper relates to the literature on central bank (CB) transparency and inflation uncertainty. Considering that opacity is a possible source for inflation uncertainty the purpose of this paper is to test the hypothesis that increase in the dispersion of the degree of CB opacity generates higher levels of inflation uncertainty.

Design/methodology/approach

In a first step, the authors present a theoretical model that shows how increase in the dispersion of the degree of CB opacity creates higher levels of inflation uncertainty. In a second step, the authors test the assumption that increase in the dispersion of the degree of CB opacity generates higher levels of inflation uncertainty in the Brazilian economy.

Findings

The findings denote that CB transparency is an important tool for guiding public expectations and thus contributes to avoiding the uncertainty caused by CB preferences.

Originality/value

This paper extends the theoretical model presented by de Mendonça and Simão Filho (2007) by the theoretical link between the forecast error and opacity. Furthermore, because the theoretical underpinning relies on the CB guiding inflation expectations, the authors construct an uncertainty measure based on survey of forecasts where such expectations can be inferred through the variability in the forecast error.

Details

Journal of Economic Studies, vol. 44 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 8 May 2017

Claudio Oliveira De Moraes and Helder Ferreira de Mendonça

The purpose of this paper is to discuss more efficient mechanisms of regulation in the financial system.

Abstract

Purpose

The purpose of this paper is to discuss more efficient mechanisms of regulation in the financial system.

Design/methodology/approach

The authors developed a theoretical two-period model of financial flows (FFs) that considers households, banks, and a social planner.

Findings

It is important to highlight that different from other studies that do not distinguish between financial crisis and financial instability, the authors assume financial instability does not mean crisis, but represents a deviation in the behavior of the aggregate financial intermediation and in the financial operations of each bank from the equilibrium.

Practical implications

The practical implication of the model is the proposition of an efficient policy for financial stability based on forward-looking financial regulations.

Social implications

An important result is that bank failures occur when banks do not maintain sufficient resources to support the liquidity constraint from the interbank market. Another result is that the central bank reacts, via exchange of reserves with the market, to financial instability. This behavior on the part of the central bank is inefficient because the banks will assume that in the case of failure they will be “saved;” thus it creates an adverse incentive (moral hazard) that can amplify the risk over the entire financial system.

Originality/value

The originality of the model is the proposition of an efficient policy for financial stability based on a forward-looking financial regulation. In this strategy the regulator acts in advance (ex ante) to minimize the mismatch of FFs in relation to the flow balance. This manner of acting is a counterpoint to the financial regulation based on capital requirement.

Details

Journal of Economic Studies, vol. 44 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 29 August 2019

José Laurindo de Almeida and Helder Ferreira de Mendonça

The purpose of this paper is to contribute to the empirical literature that analyzes the effect of the core infrastructure (telecommunication, electricity and transportation) and…

Abstract

Purpose

The purpose of this paper is to contribute to the empirical literature that analyzes the effect of the core infrastructure (telecommunication, electricity and transportation) and indirect taxation on economic growth.

Design/methodology/approach

The authors present empirical evidence through panel data analysis based on a comprehensive sample of countries (96) over a long period of time (1976 to 2014).

Findings

The findings confirm the assumption that the core of infrastructure is essential to promote economic growth. Furthermore, indirect taxation is not a tool capable of stimulating growth. In particular, new sectors of the core of infrastructure, such as the internet and mobile telephony, are capable of expanding the effect of infrastructure on growth.

Originality/value

Based on a sample of 74 countries, we include new infrastructure sectors into the analysis (transportation, fixed telephony, mobile telephony and internet), and verify changes from the 1990s.

Details

Journal of Economic Studies, vol. 46 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 14 November 2016

Luiz Lima, Claudio Foffano Vasconcelos, Jose Simão and Helder Ferreira de Mendonça

The purpose of this paper is to analyze if the unconventional monetary policy, known as quantitative easing (QE) practiced by central banks in the USA, the UK, and Japan was…

5288

Abstract

Purpose

The purpose of this paper is to analyze if the unconventional monetary policy, known as quantitative easing (QE) practiced by central banks in the USA, the UK, and Japan was effective to increase the market share after subprime crisis.

Design/methodology/approach

In order to analyze the effect of the QE on the stock markets of the USA, the UK, and Japan, the authors use an ARDL model to find the long-run relationship among the variables.

Findings

The findings denote that the QE implemented by the central banks in the USA, Japan, and the UK had a positive impact on their stock markets.

Originality/value

The results of the paper give some new insights about the conduction of monetary policy when the interest rates are close to zero.

Details

Journal of Economic Studies, vol. 43 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 31 July 2020

Helder Ferreira de Mendonça and Matheus Souza Peçanha

This paper provides empirical evidence regarding the effect of fiscal management performance on local economic development in an emerging economy.

Abstract

Purpose

This paper provides empirical evidence regarding the effect of fiscal management performance on local economic development in an emerging economy.

Design/methodology/approach

The authors performed a panel data analysis based on data from the 5,568 Brazilian municipalities from 2006 to 2015. To consider if the difference in the characteristics of the municipalities can affect the results, the authors used different samples: a total of municipalities, metropolitan, nonmetropolitan, urban and rural municipalities. Furthermore, to check the difference of the effect on economic development associated with good and bad fiscal management in the municipalities, the authors considered a sample of the 500 best and the 500 worst fiscal management performances.

Findings

The findings indicate that an improvement in fiscal management is an important strategy to stimulate local economic development. In particular, the relevance of fiscal management performance to stimulate economic development is more significant in metropolitan and urban municipalities.

Originality/value

This analysis is the first to use data that take into account all the Brazilian municipalities covering information of the 21st century. Moreover, different from the previous literature, which considered efficiency from the data envelopment analysis (DEA), the authors used a fiscal management index that allowed one to consider a time-varying fiscal performance of the Brazilian municipalities.

Details

Journal of Economic Studies, vol. 48 no. 3
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 2 September 2014

Julio Cesar Albuquerque Bastos, Helder Ferreira de Mendonça and Gabriel Montes

– The purpose of this paper is to make an empirical analysis concerning time-inconsistency problem (TIP) based on a sample of 12 countries for the period from 1993 to 2011.

Abstract

Purpose

The purpose of this paper is to make an empirical analysis concerning time-inconsistency problem (TIP) based on a sample of 12 countries for the period from 1993 to 2011.

Design/methodology/approach

The existence of TIP only makes sense if there is a trade-off between inflation and unemployment and when there is a causal relationship indicating that with more inflation, unemployment is reduced (as suggested by the Phillips curve). Hence, TIP is observed by testing the existence of cointegration between inflation rate and unemployment rate series and analyzing the sign of the estimated coefficient of the cointegration vector.

Findings

The findings indicate that the large majority of countries in the sample have policies that are consistent with long-term goals. Furthermore, it is possible to conjecture that the traditional argument that developing countries have weak institutions and thus present a fertile ground for TIP or that the adoption of inflation targeting (IT) can avoid TIP is not necessarily true.

Originality/value

This study sheds light on four important issues. First, has the change in the mindset of the monetary policy management from the 1990s eliminated TIP? Second, is TIP a sickness only for developing countries? Third, is IT associated with TIP? Fourth, has the TIP increased around the world due to the subprime crisis? In short, this paper is an advance on the empirical literature on TIP and it is a very important overview for observing the present day conduct of the monetary policy through the international experience.

Details

Journal of Economic Studies, vol. 41 no. 5
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 23 January 2009

Helder Ferreira de Mendonça

This article aims to analyze if the adoption of inflation targeting in Brazil contributed to an improvement in the conduction of monetary policy capable of increasing credibility…

3991

Abstract

Purpose

This article aims to analyze if the adoption of inflation targeting in Brazil contributed to an improvement in the conduction of monetary policy capable of increasing credibility and reducing inflation without an increase in the sacrifice rate.

Design/methodology/approach

Considering the Brazilian experience, this article estimates, through GMM and VAR methods, the offsetting effects of a monetary policy change on the output‐inflation and unemployment‐inflation trade‐offs.

Findings

The findings denote that the disinflationary process implemented in Brazil, after the adoption of inflation targeting, is not associated with the emergence of the above‐mentioned trade‐offs. Furthermore, the development of credibility in the conduction of monetary policy is an important element responsible for the achievement of this result.

Practical implications

Development of credibility is an important strategy for improving the conduction of the monetary policy.

Originality/value

The results of the paper give some new insights about the conduction of monetary policy for developing countries, which have adopted inflation targeting.

Details

Journal of Economic Studies, vol. 36 no. 1
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 3 August 2010

Helder Ferreira de Mendonça and Manoel Carlos de Castro Pires

This paper aims to study a monetary policy problem, where concerns with price stability and with the impact of interest rates on public debt are simultaneously addressed.

1789

Abstract

Purpose

This paper aims to study a monetary policy problem, where concerns with price stability and with the impact of interest rates on public debt are simultaneously addressed.

Design/methodology/approach

The problem is analytically approached under a new Keynesian monetary policy framework to which a budget constraint is added and, subsequently, the model's implications are empirically illustrated by characterizing Brazilian policies.

Findings

The findings denote the existence of a trade‐off between inflation target and public debt stability. Therefore the determination of an inflation target cannot neglect this trade‐off. Furthermore, the empirical analysis from the Brazilian case shows that the Central Bank of Brazil takes into consideration public debt when determining the interest rate.

Practical implications

The determination of the interest rate in an inflation targeting regime must consider the public debt stability.

Originality/value

This paper makes a contribution on the theme of consistency between monetary policy and fiscal equilibrium.

Details

Journal of Economic Studies, vol. 37 no. 3
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 17 May 2011

Helder Ferreira de Mendonça and Marcio Pereira Duarte Nunes

This analysis seeks to deal with the emerging economies and to reveal that, if the fiscal authority is accountable with a policy that stabilizes the public debt/GDP ratio, the…

2274

Abstract

Purpose

This analysis seeks to deal with the emerging economies and to reveal that, if the fiscal authority is accountable with a policy that stabilizes the public debt/GDP ratio, the consequence is a low Treasury bond risk premium.

Design/methodology/approach

Based on the purpose of this paper, a theoretical model is developed and empirical evidence through an autoregressive distributed lag (ADL) model, taking into account the Brazilian experience, is made.

Findings

The findings denote that domestic variables are responsible for determining the risk premium. Moreover, a correct management of the public debt and the use of primary surplus targets make for a good strategy for promoting a fall in the Treasury bond risk premium.

Practical implications

Primary surplus and public debt/GDP ratio can be used as important tools for mitigating the Treasury bond risk premium.

Originality/value

The results of the paper give some new insights about the management of fiscal policy for developing countries.

Details

Journal of Economic Studies, vol. 38 no. 2
Type: Research Article
ISSN: 0144-3585

Keywords

Article
Publication date: 6 November 2007

Helder Ferreira de Mendonça and José Simão Filho

The purpose of this paper is to study if the central bank (BC) communications affect the effectiveness of the monetary policy.

3396

Abstract

Purpose

The purpose of this paper is to study if the central bank (BC) communications affect the effectiveness of the monetary policy.

Design/methodology/approach

For this analysis, a new Keynesian theoretical model and the ordinary least squared methodology were used. The objective to be achieved was to determine if there is some effect of economic transparency on accountability, inflation average, output gap, interest and central bank credibility.

Findings

The results highlighted that central banks with greater transparency contribute to decrease inflation rate and interest rate. The findings denote that an increase in the information quality (clarity) implies a significant change in the rate of readjustment of market expectations. Furthermore, central bank transparency contributes to anchor the public expectations and to affect long‐run interest rates.

Research limitations/implications

Impulse‐answer research was employed to show how the central bank transparency affects the credibility of monetary authorities.

Practical implications

This paper suggests that the central bank publicizes its outlook, its policy monetary decisions, its expectations and its preferences.

Originality/value

The originality of the paper resides in the fact that empirical and theoretical studies were made in the single work. Also, new results were found denoting that economic transparency reduces uncertainty effect and increases the power of incentive contract made between the BC and public.

Details

Journal of Economic Studies, vol. 34 no. 6
Type: Research Article
ISSN: 0144-3585

Keywords

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