Do political commentaries command? The case of the Central Bank of Brazil

Gokhan Sahin Gunes () and Dila Asfuroglu ()

Brazilian Journal of Political Economy, 2023, vol. 43, issue 3, 686-705

Abstract: This paper investigates whether political pressure affects the conduct ofmonetary policy in Brazil. For the period between January 2010 and August 2020, weestimate a modified Taylor rule to empirically test whether the calls for lower interest ratesby presidents induce Central Bank of Brazil (BCB) to lower the policy rate. We documentthat BCB is more likely to set the policy rate in line with the preferences of political leaders.We also show that the response of BCB to political pressure remained significant even thoughpolitical pressure diminished in recent years. JEL Classification: E42; E43; E52; E58.

Keywords: Central bank independence; political pressure; Taylor rule; emerging economy (search for similar items in EconPapers)
Date: 2023
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