Shocks and uncertainty: Central Banks at Attack

Amberes

Seminario; XI Arnoldshain Seminar; 2013

University of Antwerp

The objective of the paper is to nd some explanations about the responses Central Banks adopt when economies are under the pressure of both, internal and external shocks, and their influence on output and price level. The monetary regime determines the availability of instruments to be applied in order to reach the policy objectives. For an empirical account of these features, a Structural Vector Error Correction Model (SVEC) is estimated and Impulse-Response and Variance-Decomposition analysis are performed. Three important Latin American economies (Argentina, Brazil, and Chile) are analysed, considering their evolution during the last decade: two of them (Brazil and Chile) with similar monetary regimes in force (inflation targeting) and the other (Argentina) with a dierent monetary regime (a mixof quantity of money control and managed exchange rate).