Figure 1
The figure shows eight rows, each containing five graphs. The first row depicts exchange. The first graph is titled “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins slightly below the horizontal line, rises to touch the horizontal line before 10, and remains slightly below the horizontal line from 10 to 40 on the horizontal axis. The second graph is titled “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0.02, falls with fluctuations, and ends at 0.01 on the vertical axis. The third graph is titled “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, falls to 0.005 at 10 on the horizontal axis, and continues horizontally toward the right. The fourth graph is titled “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. The curve begins from negative 0.01, falls to negative 0.02 before 10, rises slightly, and ends slightly below negative 0.01 on the vertical axis. The fifth graph is titled “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. The curve begins from 0.005, rises to 0.01 before 10 on the horizontal axis, dips down slightly, and then rises slightly to end at 0.007 on the vertical axis. The second row depicts I P C A. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 4 to 4 in increments of 2 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0 and remains at this level till 19 on the horizontal, and then begins to fall and ends at negative 0.9 on the right vertical axis. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 4 to 4 in increments of 2 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, rises to 2 before 10 on the horizontal axis, and remains constant at this level. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 4 to 4 in increments of 2 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, remains slightly below the horizontal line till 30 on the horizontal, and then rises to meet 0.2 on the vertical axis. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 4 to 4 in increments of 2 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, remains at this level for a short while, drops in a concave up manner to end at negative 2.5 on the vertical axis. The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 4 to 4 in increments of 2 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, rises to 1 at 10 on the horizontal axis, then begins to falls and crosses the horizontal line to end at negative 1 on the vertical axis. The third row depicts G D P f g v. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 10 to 5 in increments of 5 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from slightly below 0 and remains at this level, and ends at a value closer to 0 on the right vertical axis. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 10 to 5 in increments of 5 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 1, falls across the horizontal line, reaches negative 1.9 at 18 on the horizontal axis, and remains at this level to meet the vertical axis. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 10 to 5 in increments of 5 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 4, falls to 2.5, rises slightly again to 3 and remains constantly at this level until it meets the vertical axis. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 10 to 5 in increments of 5 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 1, rises slightly, then falls again, and moves horizontally to meet the vertical axis at 1.5. The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 10 to 5 in increments of 5 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, falls concave-up to meet the vertical axis at negative 6. The fourth row depicts M 1. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 20 to 0 in increments of 10 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0 and remains slightly below this level to meet the vertical axis. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 20 to 0 in increments of 10 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 1, falls across the horizontal line, reaches negative 4 and meets the vertical axis at negative 3.8. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 20 to 0 in increments of 10 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, rises to 2 at 12 on the horizontal axis, and remains consistently at this level. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 20 to 0 in increments of 10 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, falls to negative 2 at 12 on the horizontal axis, and remains consistently at this level to meet the vertical axis. The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 20 to 0 in increments of 10 units. The markings on the vertical axis are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, falls concave-up to meet negative 12 on the vertical axis. The fifth row depicts debt. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.01 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0 and remains slightly above this level to meet the vertical axis. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.01 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, dips down slightly, and then rises to meet the horizontal line at 25 on the horizontal axis. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.01 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, dips down slightly, and then rises to meet the horizontal line at 25 on the horizontal axis. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.01 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, dips down slightly, and then rises to meet the horizontal line at 25 on the horizontal axis. The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.01 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0 and rises to meet 0.015 on the vertical axis. The sixth row depicts C l b r. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0 and remains slightly above this level to meet the vertical axis. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, rises to 0.01, falls across the horizontal line at 10 on the horizontal, rises again to meet the horizontal line, continues along it till 30, and then rises further to 0.015. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins slightly below 0, rises across the horizontal line to reach 0.015 at 10 on the horizontal axis, remains constant till 15 on the horizontal axis, and falls slightly to remain close to the horizontal line. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0.015, rises above 0.02, falls again to almost the same level, and then continues to gradually fall to 0.011 on the vertical axis. The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from negative 0.02 to 0.02 in increments of 0.01 units. A horizontal line extends from marking 0 on the right vertical axis. The curve begins slightly below 0 on the horizontal axis, falls to negative 0.01 at 12 on the horizontal axis, and rises again to meet negative 0.005 on the vertical axis. The seventh row depicts Swap 180. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 1, rises slightly to 2, falls across the horizontal line, reaches slightly below the horizontal line, and remains at this level to meet the vertical axis. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 1, rises slightly to 2 to form a peak, falls gradually across the horizontal line at 30 on the horizontal axis, and meets the vertical axis slightly below 0. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, dips slightly down, rises again to meet the horizontal line at 20, moves along it, and rises slightly above 0. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, rises to 2 slightly before 10 on the horizontal axis to form a peak, falls across the horizontal line to reach below 0 at 20, and then rises back again to meet the horizontal line at 31 on the horizontal axis. The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 3 on the vertical axis, rises to a peak at 6 on the vertical axis and 10 on the horizontal axis, and then falls further to meet the vertical axis at 1.8. The eighth row depicts Selic. The first graph is under the title “Monetary policy.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 2, rises slightly to form a peak, and falls gradually to meet the vertical axis at 0.9. The second graph is under the title “Exchange rate.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, rises to form a peak at 2 on the vertical axis and 11 on the horizontal axis, and then declines gradually to meet the vertical axis at 0. The third graph is under the title “Supply.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0, remains close to the horizontal line, and rises slightly above 0 at 40 on the horizontal axis. The fourth graph is under the title “Commodities.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 0 The fifth graph is under the title “Expectation.” The horizontal axis has markings ranging from 10 to 40 in increments of 10 units. The right vertical axis shows markings ranging from 0 to 6 in increments of 2 units. The markings are in multiples of 10 to the negative 3 power. A horizontal line extends from marking 0 on the right vertical axis. The curve begins from 3 on the vertical axis, rises to a peak at 6 on the vertical axis and 10 on the horizontal axis, and then falls further to meet the vertical axis at 1.8. Note: All numerical values are estimated. The area around each curve is blue shaded, which depicts uncertainty bands for 68 percent confidence interval.Impulse response functions of the exogenous shocks (columns) on the observable factors Yt. The time horizon (horizontal line) is 42 months, and the uncertainty bands represent 68% confidence intervals (in blue). The authors