Regra de Taylor e política monetária em condições de endividamento público no Brasil

The aim of this paper is to analyze, empirically, the relationship between the Central Bank’s reaction, also known as Taylor Rule, and the Brazilian public debt. The article is justified once the majority of the researches regarding the Brazilian reaction function doesn’t model the public debt. Our results show that when the Central Bank increases the interest rate, it manages to decrease inflation and the GDP growth. However, these impacts are smoothed by the increase of the debt/GDP and, as a result, by the probability of default. The latter, better than explaining higher interest rates, is explained by them .