The empirical literature on the analysis and evaluation of monetary policy, although broad at the international level, is considerably scarce in Uruguay. This research aims to provide new evidence on the macroeconomic effects of monetary shocks for the Uruguayan economy in the period 1999 to 2009.
For this, an S-VEC model is estimated following the methodology proposed by Juselius (2006). This methodology allows to identify the macroeconomic equilibrium relations, while making it possible to simulate permanent and transient shocks on the variables of interest. These results are compared with those extracted from an S-VAR model, such as those usually used in monetary policy analyzes. The results obtained in the impulse-response simulations allow us to conclude that there is indeed room for monetary policy in Uruguay to act on its two objective variables: inflation and activity.