Inflation Targets Regime and global financial cycle: An assessment for the Brazilian economy


  • Elisangela Luzia Araujo State University of Maringá
  • Eliane Cristina de Araujo State University of Maringá (PR)/Brazil
  • Mateus Ramalho da Fonseca Maringá Faculty
  • Pedro Perfeito da Silva Central European University



inflation target regime, global financial cycle, Brazil


In light of the global financial cycle (GFC), this paper investigates the effectiveness of monetary policy in Brazil since the adoption of the inflation targeting regime. The theoretical section analyses monetary policy from the New Macroeconomic Consensus perspective, emphasizing the implications of the GFC. It also contrasts central bank theory with the post-Keynesian critique. For the empirical investigation, a Markov-switching vector autoregressive model is estimated from January 2000 to December 2017, combining the common variables from the empirical literature with the proxy for the GFC. The main results suggest that greater financial instability has a direct effect on domestic inflation.

JEL codes:C14, E12, E42

Author Biographies

Elisangela Luzia Araujo, State University of Maringá

Professor - Department of Economics

Eliane Cristina de Araujo, State University of Maringá (PR)/Brazil

Professor at Department of Economics

Mateus Ramalho da Fonseca, Maringá Faculty

Professor of Economics

Pedro Perfeito da Silva, Central European University

PhD candidate in Political Science


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How to Cite

Araujo, E. L., Araujo, E. C. de, Fonseca, M. R. da, & Silva, P. P. da. (2020). Inflation Targets Regime and global financial cycle: An assessment for the Brazilian economy. PSL Quarterly Review, 73(292), 27–49.