Abstract
The instability of the relationships between interest rates, amount of money, and exchange rate, and the transmission problems between different interest rates hinder the measurement of monetary policy through a single variable. This difficulty is particularly relevant in emerging and partially dollarized economies. This paper proposes a multivariate indicator of monetary bias for these economies in which the monetary and financial variables are considered according to the impact they have on inflation. We use a Factor Augmented Vector AutoRegressive Moving Average model with eXogenous variables (FAVARMAX) to estimate these effects in the case of Uruguay. Using the evolution of Monetary Conditions Index (MCI) proposed, we characterize the policy adopted by the Central Bank of Uruguay between 2010–2019, a period of inflation targeting.
Sign-in/Register to access full text options 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a callDisclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.
