Can central bank credibility promote a substitution effect in the monetary transmission mechanism?

We analysed whether the credibility of the Central Bank of Brazil (CBB) influences the substitution effect between the interest channel and the inflation expectations channel. Specifically, based on a DSGE model, we investigate the effects of central bank credibility on key domestic macroeconomic va...

Full description

Saved in:
Bibliographic Details
Published in:Applied economics 2023-11, Vol.55 (51), p.5975-5990
Main Authors: de Mendonça, Helder Ferreira, Filho, José Simão, de Souza, Elder Tiago C.
Format: Article
Language:English
Subjects:
Central bank credibility
Central banks
Credibility
Economic analysis
Economic theory
Inflation expectations
monetary transmission mechanism
New Keynesian Phillips curve
substitution effect
Citations: Items that this one cites
Items that cite this one
Online Access:Get full text
Tags: Add Tag
No Tags, Be the first to tag this record!
Description
Summary:We analysed whether the credibility of the Central Bank of Brazil (CBB) influences the substitution effect between the interest channel and the inflation expectations channel. Specifically, based on a DSGE model, we investigate the effects of central bank credibility on key domestic macroeconomic variables. The results show that higher central bank credibility reduces the harmful effect of fighting inflation on domestic macroeconomic variables.
ISSN:0003-6846
1466-4283
DOI:10.1080/00036846.2022.2140777