Monetary policy and regional impacts: empirical evidence from the Brazilian states*

Abstract This paper investigates the heterogeneous regional effects of monetary policy across Brazilian states from 2004 to 2018. It introduces three new variables and employs an alternative empirical technique to identify these regional effects. Overall, the Northeast and North regions were the most significantly affected, both positively and negatively; credit emerged as the most active regional transmission mechanism, followed by interest rates and exchange rates. The paper also highlights the importance of coordinating economic policies, particularly monetary and fiscal policies, to address inequalities and economic disparities in peripheral states. JEL: R12, O23, R15.