The contagion effect of public debt on monetary policy

Vol. 26 No. 2 (2006)

Apr-Jun / 2006
Published April 1, 2006

How to Cite

Barbosa, Fernando de Holanda. 2006. “The Contagion Effect of Public Debt on Monetary Policy: The Brazilian Experience”. Brazilian Journal of Political Economy 26 (2):231-38.

The contagion effect of public debt on monetary policy

the Brazilian experience

Fernando de Holanda Barbosa
Professor of Economics, Getulio Vargas Foundation Graduate School of Economics.
Brazilian Journal of Political Economy, Vol. 26 No. 2 (2006), Apr-Jun / 2006, Pages 231-238


This paper attempts to explain why the Brazilian inter-bank interest rate is so high compared with rates practiced by other emerging economies. The interplay between the markets for bank reserves and government securities feeds into the inter-bank rate the risk premium of the Brazilian public debt.

JEL Classification: E4; E5.

Keywords: inter-bank interest rate public debt risk premium monetary policy operational procedures