Abstract:We argue that, theoretically, exchange rate pass-through (ERPT) into consumer prices may be nonlinear in contrast to standard linear estimates found in the literature. ERPT can be higher in periods of financial or confidence crises, when firms have no incentive to absorb cost increases in their margins. We test this hypothesis applying a logistic smooth transition (STR) model to Mexican data. Using two different measures of macroeconomic instability as transition variables, we find that ERPT does seem to increase in periods of macroeconomic distress, which highlights the importance of a stable macroeconomic environment in reducing ERPT in emerging markets.JEL Classification: E31, E52, F41.

The paper presents evidence on exchange rate pass-through (ERPT) for a set of emerging markets before and after the adoption of Inflation Targeting (IT). Some developed economies are also analysed for comparison. We use an ARDL model to estimate the short-run and the long-run effects of depreciations on consumer and producer prices. The results show that ERPT has declined after IT for both price indexes. Nonetheless, this reduction does not mean that ERPT is no longer existent, especially over the long-run.
O artigo apresenta evidência sobre o exchange rate pass-through (ERPT) para um grupo de economias emergentes que adotaram o regime de metas inflacionárias. Algumas economias desenvolvidas também são analisadas para efeito de comparação. O ERPT é estimado por meio de um modelo ARDL para preços ao consumidor e ao produtor. Os resultados mostram uma forte redução do ERPT para ambos os índices de preços, após a adoção do regime de metas. A queda observada, porém, não significa que o ERPT tenha sido totalmente eliminado, em especial no longo prazo

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ResumoEste artigo investiga a existência e a intensidade da relação entre o calendário das eleições presidenciais brasileiras e a dinâmica da execução orçamentária federal, no período de 1985 a 2010, levando em conta as mudanças institucionais nesse período. Concluiu-se que a política fiscal federal apresenta comportamento cíclico, onde as receitas e despesas públicas estão condicionadas, em boa parte, à periodicidade das eleições presidenciais. Foi inconclusivo o efeito da Emenda à Reeleição sobre a condução da política fiscal. Todavia, a Lei de Responsabilidade Fiscal permitiu reduzir as oscilações cíclicas em boa parte das despesas e receitas do orçamento federal.Palavras-chave: Ciclo político; Política fiscal; Orçamento; Eleições; Responsabilidade fiscal; Reeleição. AbstractIn this paper we investigate the existence of a relationship between presidential elections in Brazil and the conduct of fiscal policy by the federal government, along the period from 1985 to 2010. We also look at the possible effects of major institutional changes that took place in Brazil over the period, namely the Fiscal Responsibility act and the presidential reelection amendment to the constitution. Overall, we conclude that at the federal level the conduct of fiscal policy behaves cyclically, following the political calendar. The results for the reelection amendment are inconclusive regarding its true importance for the conduct of fiscal policy at the federal level. However, we found an important role for the fiscal responsibility act in reducing annual fluctuations in some revenues and expenditures of the federal budget.

The article presents evidence on credibility gains from the adoption of Inflation Targeting (IT), for a set of developed and emerging markets. We carry out our analysis for Brazil, Mexico, Sweden and the UK, and ask whether the adoption of this monetary framework strengths monetary policy credibility. To answer this question we apply a time-varying coefficients methodology to estimate the time path of the trade-off between inflation and output. Following the literature a more favourable trade-off is believed to be linked to improvements in monetary policy credibility. The results show a clear picture of credibility gains from the adoption of IT.