01869cas a2200253 a 4500 AALejournalIMF014390 230101c9999 xx r poo 0 0eng d 5.00 USD 9781484385210 1018-5941 BD-DhAAL BD-DhAAL Perrelli, Roberto. Time-Varying Neutral Interest Rate-The Case of Brazil / Roberto Perrelli, Shaun Roache. Washington, D.C. : International Monetary Fund, 2014. 1 online resource (32 pages) IMF Working Papers <strong>Off-Campus Access:</strong> No User ID or Password Required <strong>On-Campus Access:</strong> No User ID or Password Required Electronic access restricted to authorized BRAC University faculty, staff and students Emerging markets have experienced a sizeable decline in their neutral real interest rates until recently. In this paper we try to identify the main factors that contributed to it, with a focus on Brazil. We estimate an interval for Brazil's time-varying neutral rate based on a range of structural and econometric models. We assess the implications of incorrectly estimating a time-varying neutral rate using a small structural model with a simple monetary policy instrument rule. We find that policy prescriptions are very different when facing uncertainty of neutral rate and of output gap. Our result contrasts sharply with Orphanides (2002), suggesting that the best response to neutral rate uncertainty is to ensure policy remains highly sensitive to inflation and output variations. Mode of access: Internet Roache, Shaun. IMF Working Papers; Working Paper ; No. 2014/084 Full text available on IMF http://elibrary.imf.org/view/journals/001/2014/084/001.2014.issue-084-en.xml IMF e-Library