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After the stabilization of inflation rates in Brazil, Monetary Correction for financial data was extinguished. Since then, the distinct reflections of prices variations on monetary and non-monetary variables presented on balance sheets are no longer considered. From 2004 to 2013, however, the cumulative inflation reaches 226%. In this situation, questions about the reliability of the greatest tools we have in the finance research world - financial data of companies - emerges. This work compared financial indicators and empirical models built with data adjusted for inflation and original data issued by firms. A database of 143 Brazilian companies traded on Bovespa were adjusted for inflation, from 2004 to 2013, on the precepts of the extinct Monetary Correction. We obtained two different samples: the first containing financial data adjusted for inflation and the second corporate data originally released. Statistical tests showed that financial indicators such as ROI, Asset Turnover, Debt and Market-to-book are significantly higher when we do not consider the effects of inflation. In addition, the panel regression models, when adjusted, had higher predictable power (greater R²) and representative changes of significance on the variables and coefficients. The results indicated that inflation is essential in the analysis of financial data and must be considered in the preparation of reliable databases, although assumed as stable in recent years. 

Abstract The purpose of this study was to empirically verify the existence or not of a distortion in the comparability of information when inflationary effects are omitted from financial statements. Although inflation has been under control in Brazil since the Plano Real, with indices well below those recorded in the 1980s and 1990s, discussing the need for accounting recognition of the effects of inflation remains an extremely relevant and pertinent issue in light of the proposal of accounting to produce faithful information that closely reflects the economic reality in which organizations operate. The results of the research show that financial accounting has been directly affected by the omission of inflationary effects in financial statements, drawing attention to the negative effects this has caused on the quality of the information produced. In order to operationalize the research, the Balance Sheet Monetary Correction (BSMC) was applied to the balance sheets of Brazilian companies from the siderurgical and metallurgical sector listed on the BM&FBOVESPA in the period from 1996 to 2016. Based on the variables net income, return on equity (ROE), and return on assets (ROA), and two conceptual axes of comparability (between entities and between periods), the statistical parameters were developed and the hypotheses were defined, which were tested using the Student t parametric test. This article shows the damage caused to the decision-making process of the external users for whom financial statements are intended when these are prepared neglecting the effects of inflation. This is verifiable through the analyses of the results obtained, including the observation of significant distortions between the means of the corrected indicators and the means of the historical indicators, such as in the case of net income in 2001, 2002, 2012, 2013, 2014, and 2016 (33.98%, 91.92%, -65.54%, -30.01%, -53.59%, and 26.30% variation, respectively), of ROE (-67.16%, -61.43%, -53.06%, -63.46%, -133.81%, and 65.00% variations in 2008, 2009, 2010, 2011, 2014, and 2015, respectively), and of ROA (-26,70%, -41.14%, -33,34%, -43,49%, 98,83%, and -413,68% in 2005, 2009, 2010, 2011, 2012, and 2014, respectively). Resumo O estudo teve por objetivo verificar empiricamente a existência ou não de distorção da comparabilidade da informação, quando omitidos os efeitos inflacionários nas demonstrações contábeis. Apesar de o Brasil vivenciar, desde o Plano Real, um cenário de inflação sob controle, com índices bem aquém dos registrados nas décadas de 1980 e 1990, discutir sobre a necessidade do reconhecimento contábil dos efeitos da inflação permanece como uma questão extremamente relevante e pertinente, em face da proposta da contabilidade de produzir informações fidedignas que reflitam o mais próximo à realidade econômica na qual operam as organizações. Os resultados da pesquisa evidenciam que a contabilidade financeira tem sido diretamente afetada pela omissão dos efeitos inflacionários nas demonstrações contábeis, chamando a atenção para os efeitos negativos causados à qualidade das informações por ela produzidas. Para operacionalização da pesquisa, aplicou-se, aos balanços de empresas brasileiras do subsetor de siderurgia e metalurgia listadas na Bolsa de Valores, Mercadorias e Futuros de São Paulo, no período de 1996 a 2016, a correção monetária de balanços (CMB). A partir das variáveis lucro líquido, retorno sobre o patrimônio líquido (return on equity - ROE) e retorno sobre ativos (return on assets - ROA) e de dois eixos conceituais de comparabilidade (entre empresas e entre períodos), foram desenvolvidos os parâmetros estatísticos e definidas as hipóteses, as quais foram testadas por meio do teste paramétrico t de Student. A pesquisa mostra o prejuízo causado ao processo de tomada de decisão dos usuários externos, a quem se destinam as demonstrações contábeis quando estas são preparadas, desprezando-se os efeitos da inflação. Tal prejuízo é verificável pelas análises dos resultados obtidos, dentre as quais a observação de relevantes distorções entre as médias dos indicadores corrigidos e as médias dos indicadores históricos, como o caso do lucro líquido em 2001, 2002, 2012, 2013, 2014 e 2016 (33,98, 91,92, -65,54, -30,01, -53,59 e 26,30% de variação, respectivamente), do ROE (-67,16, -61,43, -53,06, -63,46, -133,81 e 65% de variações em 2008, 2009, 2010, 2011, 2014 e 2015, respectivamente) e do ROA (-26,70, -41,14, -33,34, -43,49, 98,83 e -413,68% em 2005, 2009, 2010, 2011, 2012 e 2014, respectivamente).

This paper is concerned with the design of institutional arrangements for low inflation in small open economies. In the real world of information asymmetries, uncertain expectations and changeable preferences, it is not enough to create an autonomous and publicly accountable central bank. In addition, the central bank and the treasury must work together on the design, implementation, monitoring and, when necessary, the revision of macroeconomic policy, and on providing the public with information on ongoing economic developments and interpretation of the macroeconomic strategy.

Cover -- Editorial advisory board -- Guest editorial -- Determinants of tracking error in German ETFs - the role of market liquidity -- Leveraged ETF option strategies -- Cointegration-based trading:evidence on index tracking & market-neutral strategies -- Cyclical comovements of the world equity indexes -- Financial integration and diversification benefits: China and ASEAN4 countries

This paper reviews the fiscal activities that governments in a sample of 26 developing countries have obliged their central banks to undertake. In the main, these activities fall under five categories: (1) collecting seigniorage; (2) imposing financial restriction; (3) implementing selective credit policies; (4) undertaking foreign exchange operations at nonmarket-clearing prices; and (5) providing implicit or explicit deposit insurance at subsidized rates and recapitalizing insolvent financial institutions. Not all central banks engage in all these activities, but some central banks perform additional fiscal activities such as collecting taxes and running food procurement programs.

Legal restrictions governing financial transactions in Chile have produced a system in which most financial assets are either 30-day non-indexed assets or 90-day indexed assets. This paper analyzes data on the rates of return of these assets to determine the extent to which efficient arbitrage takes place under conditions of partial financial indexation. The data cannot reject the joint hypothesis that participants in financial markets formulate their expectations rationally and that these markets operate efficiently. The data also shows that the indexed/non-indexed interest spread is an accurate predictor of future changes in inflation. The significant implications of these findings for the conduct of monetary policy are also discussed in some detail.

The present paper provides an analytical discussion on a popular issue: the measurement problems associated with the inflation tax. It is well known that conventional national accounts definitions usually misplace the proceeds from the inflation tax: they are typically not subtracted from disposable income, and they are not included as part of the Government's revenues \"above the line.\" Using a simple, perfect foresight monetary model developed by Calvo (1986, 1987), this paper analyzes the difference between macroeconomically relevant concepts of public and private saving, and their national accounts counterparts. The paper goes on to show that the national account aggregates create the impression that heavier reliance on the inflation tax on the part of the Government is associated with higher private saving, even in situations where the composition of government revenues does not have any effect on private saving.

This study discusses the channel of monetary policy transmission mechanism of money, credit, interest rate and exchange rate in Indonesia. The effectiveness of the transmission mechanism of monetary policy in Indonesia can be described and explained by the ultimate target object in Indonesia, specifically economic growth and inflation. The analytical tool used in this study is Vector Error Correction Model (VECM) which uses impulse response and variance decomposition in determining the effectiveness of monetary policy transmission mechanism. The results explain that the credit channel is considered effective in explaining economic growth and the interest rate channel is effective in explaining inflation found in Indonesia.