The monetary transmission mechanism in Chile: a medium-sized macroeconometric model
The objective in building and specifying macroeconomic models is to reflect the main characteristics of an economy in a stylized way. This article describes a macroeconometric model for the Chilean economy. The aim of the model is to forecast the main macroeconomic variables, along with policy exercises and simulations. The different model equations describe both short-term movements within the economy and the long-term equilibrium. It is in this latter sense that the model can be described as structural. The main area interest in this kind of model involves the different dynamics of the variables, which can provide insight, for example, on the lags and magnitude of monetary policy transmission mechanisms.