Emerging market economies benefit from central banks that respond quickly and forcefully to inflationary surges, a new study from the National Bureau of Economic Research shows.
The paper, published at the end of October, says that by reacting strongly to spikes in inflation, central banks can improve their reputations among citizens who are uncertain about the institutions’ stances.
The authors – Luigi Bocola, Alessandro Dovis, Kasper Jørgensen and Rishabh Kirpalani – apply their model to Brazil
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