![Sample our Economics, Finance,Business & Industry journals, sign in here to start your access, latest two full volumes FREE to you for 14 days]({"type":"image" , "src" : "/sda/5931/TOC-Subject-Sample-2021-Economics-Finance-Business-Industry.jpg"})
ABSTRACT
The article indicates the yield curve can be modeled using a continuous estimator as smooth transition regression, instead of traditional switch models, because bonds are traded continuously in the financial market. The results indicate that nonlinearity in the yield curve explains the pitfalls of monetary policy. The positive correlation between inflation and spread is consistent with a rise on uncertainty due to inflation risk or seems to indicate Brazilian Central Bank’s monetary policy credibility in the sample period. Therefore, if dependence on international capital exists, the Brazilian economic policy makers must monitor the movements in yield and analyze its feedback frequently in order to guide their plans and decisions.
KEY WORDS:
Acknowledgments
The views expressed here are those of the authors and not necessarily those of the Bank of Brasil.
Notes
1. EMBI+ Brazil measures the price movement of securities from one day to the other. Its unit is the base point;—that is, 500 basis points—implying that Brazilian bonds pay 5 percent more than U.S. bonds, considering periodic interest payments, purchase price, redemption value, and the time remaining until maturity obligations; this value is used by domestic and international investors