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2333-2349

Helder Ferreira de Mendonça (helderfm@hotmail.com) and Roseli Silva (roselisilva@usp.br)
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Helder Ferreira de Mendonça: Fluminense Federal University and National Council for Scientific and Technological Development
Roseli Silva: University of São Paulo - RP

Authors registered in the RePEc Author Service: Helder Ferreira de Mendonça

Economics Bulletin, 2016, vol. 362333-2349, issue 4, 2333-2349

Abstract: This study investigates empirically how the fiscal credibility affects the inflation rate in an emerging economy under inflation target. Based on the Brazilian experience, a fiscal credibility index is built taking into account how the market expectations are anchored to the primary surplus target. The main idea is that a government that is able to anchor expectations around the target (case of high credibility) may reduce inflation. The findings provide empirical evidence that the success of government in achieving the fiscal primary surplus target (gain of credibility) is an important ally to reduce inflation rate and its expectations.

Keywords: fiscal credibility; inflation; primary surplus; inflation targeting (search for similar items in EconPapers)
JEL-codes: E3 E6 (search for similar items in EconPapers)
Date: 2016-12-02
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Citations: View citations in EconPapers (8)

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