WE DETERMINE MACROECONOMICS OF THE MACHINERY AND EQUIPMENT SECTOR: AN ANALYSIS WITH VEC MODELS FROM 2002 TO 2020

Abstract

The machinery and equipment industry is essential for the economy, as it represents the basis of productive investment, generates jobs, knowledge and positive externalities for the entire economic system. Given this, the present study seeks to verify which macroeconomic variables explain the sector's trajectory. To this end, an Error Correction Mechanism model for the period from 2002 to 2020 is estimated. Analyzing the results obtained, it appears that the exchange rate, the SELIC, the IPCA and the external sector, in addition to the performance of the lagged sector itself, explain the behavior of this sector. Furthermore, long-term imbalances are corrected primarily by changes in the sector's own production volume and by adjustments related to the external sector. Finally, the interest rate shows short-term effects, but in the long term it cannot correct the deviations in the machinery and equipment sector, precisely, the increase in interest ends up impacting the exchange rate.