ASSESSING EMPIRICAL RELATIONSHIPS BETWEEN OUTPUT GAP, INVESTMENT DECISIONS AND POTENTIAL OUTPUT FOR THE BRAZILIAN ECONOMY

Resumo

This work aims at identifying the long term effects of investment decisions, in consistence with the endogenous potential output growth hypothesis, according to which the potential output dynamics is endogenous by the demand side. It makes an empirical analysis for the Brazilian economy during the period from 1971 to 2010, through an implementation of the Vector Autoregressive (VAR) method. The results are consistent with the hypothesis under analysis and have important implications for the monetary policy in particular, and for the economic policy as a whole.