Monetary Policy and Regional Output in Brazil

Rafael Rockenbach da Silva Guimaraes and Sérgio Monteiro ()

Revista Brasileira de Economia - RBE, 2014, vol. 68, issue 1

Abstract: This work presents an analysis of whether the effects of the Brazilian monetary policy on regional outputs are symmetric. The strategy developed combines the techniques of principal component analysis (PCA) to decompose the variables that measure regional economic activity into common and region-specific components and vector autoregressions (VAR) to observe the behavior of these variables in response to monetary policy shocks. The common component responds to monetary policy as expected. Additionally, the idiosyncratic components of the regions showed no impact of monetary policy. Once monetary policy affects the common component of the regional economic activity and does not impact its idiosyncratic components, it can be considered symmetrical.

Date: 2014
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