Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case

Since the early 1990s, several countries have adopted inflation targeting (IT). However, IT may not be sufficient to ensure fiscal discipline, and governments can still pursue irresponsible fiscal policies under IT. The adoption of irresponsible policies, which lead to a weak fiscal credibility, co...

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Autores principales:	Gabriel Caldas Montes, Ana Jordânia de Oliveira, Rodolfo Tomás da Fonseca Nicolay
Formato:	article
Lenguaje:	EN PT
Publicado:	Universidade de São Paulo 2019
Materias:	Fiscal policy Monetary policy credibility Economics as a science HB71-74
Acceso en línea:	https://doaj.org/article/1ca5617a9947492294139477b43c1dac
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spelling	oai:doaj.org-article:1ca5617a9947492294139477b43c1dac2021-11-24T14:26:31ZEmpirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case10.1590/0101-41614914gar0101-41611980-5357https://doaj.org/article/1ca5617a9947492294139477b43c1dac2019-03-01T00:00:00Zhttps://www.revistas.usp.br/ee/article/view/118404https://doaj.org/toc/0101-4161https://doaj.org/toc/1980-5357 Since the early 1990s, several countries have adopted inflation targeting (IT). However, IT may not be sufficient to ensure fiscal discipline, and governments can still pursue irresponsible fiscal policies under IT. The adoption of irresponsible policies, which lead to a weak fiscal credibility, could undermine the credibility of the central bank. In the present study, we investigate whether a correlation between fiscal credibility and central bank credibility exists. The study contributes to the literature since it presents evidence on the relation between fiscal credibility and central bank credibility. The empirical analysis uses different econometric techniques (OLS, GMM and TOBIT). The findings suggest a positive relation between fiscal credibility and central bank credibility. Gabriel Caldas MontesAna Jordânia de OliveiraRodolfo Tomás da Fonseca NicolayUniversidade de São PauloarticleFiscal policyMonetary policycredibilityEconomics as a scienceHB71-74ENPTEstudos Econômicos, Vol 49, Iss 1 (2019)
institution	DOAJ
collection	DOAJ
language	EN PT
topic	Fiscal policy Monetary policy credibility Economics as a science HB71-74
spellingShingle	Fiscal policy Monetary policy credibility Economics as a science HB71-74 Gabriel Caldas Montes Ana Jordânia de Oliveira Rodolfo Tomás da Fonseca Nicolay Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case
description	Since the early 1990s, several countries have adopted inflation targeting (IT). However, IT may not be sufficient to ensure fiscal discipline, and governments can still pursue irresponsible fiscal policies under IT. The adoption of irresponsible policies, which lead to a weak fiscal credibility, could undermine the credibility of the central bank. In the present study, we investigate whether a correlation between fiscal credibility and central bank credibility exists. The study contributes to the literature since it presents evidence on the relation between fiscal credibility and central bank credibility. The empirical analysis uses different econometric techniques (OLS, GMM and TOBIT). The findings suggest a positive relation between fiscal credibility and central bank credibility.
format	article
author	Gabriel Caldas Montes Ana Jordânia de Oliveira Rodolfo Tomás da Fonseca Nicolay
author_facet	Gabriel Caldas Montes Ana Jordânia de Oliveira Rodolfo Tomás da Fonseca Nicolay
author_sort	Gabriel Caldas Montes
title	Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case
title_short	Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case
title_full	Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case
title_fullStr	Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case
title_full_unstemmed	Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case
title_sort	empirical evidence on the relation between fiscal credibility and central bank credibility: the brazilian case
publisher	Universidade de São Paulo
publishDate	2019
url	https://doaj.org/article/1ca5617a9947492294139477b43c1dac
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_version_	1718414977750007808

Empirical evidence on the relation between fiscal credibility and Central Bank credibility: the Brazilian case

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