Carlos Eduardo Gomes

Throughout the evolution of macroeconomic theory, the approaches discuss the ability of monetary policy to affect real variables in the long run. In this research we propose the application of a theoretical model that includes nominal rigidities arising from transaction costs and real rigidities arising from the firms' competition structure. We present the equilibrium equations of the theoretical model of Dias (2002) for the main economic aggregates in the short run, in individual and aggregate level, and in the long run, considering the stable state. As a theoretical result, the currency affects consumption and agents of purchasing power in the short and the long run. Transaction costs have a prominent role in this review and may alter the effects of monetary policy on economic aggregates. The concern is to investigate whether economic policy can affect the long run value (average) of the real consumption - the theoretical model allows analysis of other relevant variables for economic analysis. To achieve the objective, empirical analysis using time series methodology Vector Autoregressive (VAR) and Structural Vector Autoregressive (SVAR) models with exogenous variables because, as intended mainly to test the relationship for the long run variables, the SVAR models are appropriate, with the ability to establish long run relationships among these aggregates with a degree of confidence, allowing the simulation analysis of shocks through impulse response functions and variance decomposition. Furthermore, the research proposes empirical advances in the application of this model to the Brazilian economy, identifying greater capacity of economic policy to affect the aggregates in the long run. The theoretical results of the model indicate that real wage, transaction costs (number of transactions with credit/debit cards) and currency tend to have a positive influence on consumption, while inflation and delinquency have a negative effect on consumption. All the empirical specifications confirmed the theoretical results of the Dias (2002) model for the Brazilian economy and, therefore, the research can help policymakers measure the long run consequences of their decisions at the level of the Monetary Policy Committee, that is, the Results converge in the non-neutrality of the currency in the long run in the Brazilian economy.