Fear of Floating in Brazil: Did Inflation Targeting matter?

Reginaldo Nogueira and Miguel Leon-Ledesma

The North American Journal of Economics and Finance, 2009, vol. 20, issue 3, 255-266

Abstract: Brazil implemented Inflation Targeting (IT) after the breakdown of a managed floating regime, showing a similar pattern to most of the emerging markets that adopted this framework. This unplanned policy change has led to some disbelief regarding the country's commitment to its inflation objective and to a floating exchange rate. In this paper we analyse whether the adoption of IT has led to an actual shift in the country's approach to the exchange rate. We find greater exchange rate flexibility and milder interventions in the foreign exchange market after IT. We conclude that possible interventions should not be seen as Fear of Floating, but as a required policy for the attainment of the inflation targets.

Keywords: Inflation; Targeting; Emerging; Markets; Fear; of; Floating (search for similar items in EconPapers)
Date: 2009
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Citations: View citations in EconPapers (22)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:ecofin:v:20:y:2009:i:3:p:255-266

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