Investment-Specific Technological Change and the Brazilian Macroeconomy

Vladimir K. Teles, Celso Jose Costa Junior, Rafael Mouallem Rosa
2015 Brazilian Review of Econometrics  
This study discusses the importance of investment-specific technological change for the Brazilian macroeconomy. We document evidence that a model that takes this specific type of technical progress into account is better suited to explain the Brazilian economy over the long term. We then present a DSGE [Dynamic Stochastic General Equilibrium] model with two sectors that incorporates technical progress in the investment goods sector and estimate the model for Brazil. The results demonstrate that
more » ... productivity shocks in the investment goods sector are more volatile and persistent than in the final goods sector and that the output gap has a greater variance in the two-sector model. In addition, these results recommend a more rigorous monetary policy prescription to improve the economy's well-being.
doi:10.12660/bre.v35n22015.57675 fatcat:pbz3nnan35anvlro45sq4lr2di