The relation between the market of public debt and the monetary policy in Brazil

The objective of this article is to argue and to analyze the relevance of the public debt, particularly of its duration, as an important monetary policy mechanism transmission. It is looked to argue that the characteristic of the public debt market in Brazil, strong concentrated in post-fixed assets...

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Bibliographic Details
Published in:Revista de economia contemporânea 2008-12, Vol.12 (3), p.491
Main Authors: Rafael Quevedo do Amaral, Oreiro, José Luis
Format: Article
Language:Portuguese
Subjects:
Economic analysis
Economic theory
Monetary policy
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Summary:The objective of this article is to argue and to analyze the relevance of the public debt, particularly of its duration, as an important monetary policy mechanism transmission. It is looked to argue that the characteristic of the public debt market in Brazil, strong concentrated in post-fixed assets, especially in Treasure's Financial Letters, removes part of the monetary policy effectiveness. Considering that the LFTs are assets with face value immune to variations in the interests rate and that approximately half of public debt is index to such assets, an important mechanism of monetary policy transmission, the wealth effect, is interrupted.
ISSN:1980-5527
DOI:10.1590/S1415-98482008000300004