Research

Core Inflation Communication in Practice

Eduardo Amaral, Alejandrina Salcedo, Ilhyock Shim and Mark Wynne · September 2026 · BIS Quarterly Review

Using a large language model to read central bank publications, we uncover patterns in how central banks communicate about core inflation. We find that references to core inflation have become more frequent and the range of metrics cited has broadened.

Abstract & citation · Paper

Suggested citation
Amaral, Eduardo, Alejandrina Salcedo, Ilhyock Shim, and Mark A. Wynne (2026). “Core inflation communication in practice.” BIS Quarterly Review, September, pp. 69–82.

The Capital Puzzle Is Not About Capital

Eduardo Amaral · 2026 · Working paper

Can monetary tightening lower real interest rates? I show why conventional measures of the real interest rate gap can misrepresent the monetary policy stance and propose an alternative measure.

Abstract & citation · Latest paper · Policy brief

Related BIS version: The capital puzzle, Working Paper 1288 (2025).

Suggested citation
Amaral, Eduardo (2026). “The Capital Puzzle Is Not About Capital.” Working paper. SSRN 6597968.

Smoothing the New-Keynesian Capital Puzzle

Eduardo Amaral · 2024 · Central Bank of Brazil, Working Paper 606

Interest-rate smoothing helps resolve the capital puzzle in New Keynesian models and supports a structural interpretation of the real interest rate channel.

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Suggested citation
Amaral, Eduardo (2024). “Smoothing the New-Keynesian Capital Puzzle.” Working Paper 606, Central Bank of Brazil.

Thesis chapters

Essays in Monetary Policy with Risky Assets
Ph.D. thesis · PUC-Rio · 2021
Haralambos Simeonidis prize for best Ph.D. thesis, 2022.

Read thesis (PDF) · Defense slides · Replication code

Interest, Prices, and Risk

Eduardo Amaral · 2021 · Ph.D. thesis, Chapter 1

Risk in the asset used for monetary policy can weaken control over inflation and create an inflationary bias. Whether the central bank targets a risky or risk-free rate matters.

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Suggested citation
Amaral, Eduardo G. C. (2021). “Interest, Prices, and Risk.” Chapter 1 of Essays in Monetary Policy with Risky Assets, Ph.D. thesis, Pontifical Catholic University of Rio de Janeiro (PUC-Rio).

Real neutral rates estimated by univariate filters in advanced and emerging economies, 2000–2020. Emerging-economy rates lie above advanced-economy rates in the paper’s Figure 1.

Real neutral rates in advanced and emerging economies (Figure 1).

An Unpleasant Coincidence for Monetary Policy: Risky Assets and Fiscal Limits

Eduardo Amaral · 2021 · Ph.D. thesis, Chapter 2

A model calibrated to Brazil links sovereign default risk to higher inflation and interest rates. Ignoring risk in monetary policy assets reinforces this unpleasant coincidence.

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Suggested citation
Amaral, Eduardo G. C. (2021). “An Unpleasant Coincidence for Monetary Policy: Risky Assets and Fiscal Limits.” Chapter 2 of Essays in Monetary Policy with Risky Assets, Ph.D. thesis, Pontifical Catholic University of Rio de Janeiro (PUC-Rio).

Two diagrams from Figure 14 compare the Fisher relation and Taylor rule with and without adjustments for policy-asset default risk. The right panel shows the central bank adjusting its policy rule to that risk.

How policy-asset default risk shifts equilibrium (Figure 14).

On the Mechanics of New-Keynesian Models: Smoothing the Capital Controversy Out

Eduardo Amaral · 2021 · Ph.D. thesis, Chapter 3

Examines how interest-rate smoothing in the Taylor rule can resolve the capital controversy and improve monetary-policy identification in models with endogenous capital.

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Suggested citation
Amaral, Eduardo G. C. (2021). “On the Mechanics of New-Keynesian Models: Smoothing the Capital Controversy Out.” Chapter 3 of Essays in Monetary Policy with Risky Assets, Ph.D. thesis, Pontifical Catholic University of Rio de Janeiro (PUC-Rio).

Figure 5 plots direct, indirect and total effects of capital on the real interest-rate response to a monetary shock. The black total-effect curve remains above zero with interest-rate smoothing parameter kappa equal to 0.1.

Decomposing the effect of capital on the real rate (Figure 5).

Earlier research

A Comparative Analysis of the Economic Crises of 1929 and 2007 in the United States

Eduardo Amaral · 2010 · Undergraduate senior thesis · UFRJ

Compares the origins, unfolding and policy responses of the 1929 and 2007 US crises through historical narratives and an analysis of the government’s containment and recovery measures.

In Portuguese

From the time I was discovering that I wanted to become an economist...

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Suggested citation
Amaral, Eduardo Gonçalves Costa (2010). “Uma análise comparativa das crises econômicas de 1929 e 2007 nos Estados Unidos.” Undergraduate thesis, Industrial Engineering, Escola Politécnica, Universidade Federal do Rio de Janeiro (UFRJ).

Figure 35 from the undergraduate thesis compares real US GDP after the crises of 1929 and 2007, with each crisis year set to 100. The 1929 series falls to 73 after four years; the 2007 series reaches 97 after two years.

Real GDP after the 1929 and 2007 crises (Figure 35; crisis year = 100).

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