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Exchange Rate Pass-Through in Brazil

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  • Agnes Belaisch
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    Abstract

    In the last two years the real has undergone a large depreciation and the central bank has missed its inflation target in 2002 for the second year in a row. Inflation, however, has increased much less than the rate of currency depreciation and the pickup in inflation in the last quarter of 2002 raises the question of whether the exchange rate passthrough has finally risen. This paper argues that the passthrough in Brazil has fallen compared with estimates in other studies on earlier time periods, and remains low when compared with the passthrough in other Latin American countries. Indeed the passthrough is more comparable with that of G-7 countries—although in Brazil the effect on prices appears to be faster.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 03/141.

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    Length: 19
    Date of creation: 01 Jul 2003
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    Handle: RePEc:imf:imfwpa:03/141

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    Related research

    Keywords: Inflation targeting; Exchange rates; exchange rate; inflation; exchange rate shock; price inflation; currency depreciation; exchange rate pass; exchange rate shocks; exchange rate changes; price level; monetary policy; exchange rate depreciation; increase in inflation; general price inflation; foreign exchange; exchange rate volatility; aggregate demand; exchange rate change; measure of inflation; inflation equation; exchange rate deviations; effect of exchange rate changes; exchange rate dynamics; currency appreciation; acceleration in inflation; real exchange rate; exchange rate movements; change in inflation; exchange rate fluctuations; real exchange rate dynamics; monetary economics; high rates of inflation; rise in inflation; inflation target;

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    Cited by:
    1. Luis Fernando Escobar Patiño & Pablo Hernán Mendieta Ossio, 2006. "Inflación y depreciación en una economía dolarizada: el caso de Bolivia," Monetaria, Centro de Estudios Monetarios Latinoamericanos, Centro de Estudios Monetarios Latinoamericanos, vol. 0(1), pages 1-39, enero-mar.
    2. Andreas Bachmann, 2012. "Exchange rate pass-through to various price indices: empirical estimation using vector error correction models," Diskussionsschriften, Universitaet Bern, Departement Volkswirtschaft dp1205, Universitaet Bern, Departement Volkswirtschaft.
    3. Alexander F. Tieman, 2004. "Interest Rate Pass-Through in Romania and Other Central European Economies," IMF Working Papers 04/211, International Monetary Fund.
    4. Federico Marongiu, 2004. "Devaluación e Inflacion en Argentina despues de la Convertibilidad," Macroeconomics, EconWPA 0404013, EconWPA.
    5. Martins Bitans, 2004. "Pass-Through of Exchange Rates to Domestic Prices in East European Countries and the Role of Economic Enviroment," Working Papers, Latvijas Banka 2004/04, Latvijas Banka.
    6. Irineu De Carvalho Filho & Marcos Chamon, 2008. "A Micro-Empirical Foundation for the Political Economy of Exchange Rate Populism," IMF Staff Papers, Palgrave Macmillan, vol. 55(3), pages 481-510, July.
    7. Eliane Cristina de Araújo, 2011. "Volatilidade Cambial eCrescimento Econômico: Teorias e Evidencias para Economias emDesenvolvimento e Emergentes (1980 e 2007)," Anais do XXXVII Encontro Nacional de Economia [Proceedings of the 37th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of 105, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    8. Carlos Eduardo Schönerwald da Silva & Matías Vernengo, 2008. "The Decline of the Exchange Rate Pass-Through in Brazil: Explaining the "Fear of Floating"," International Journal of Political Economy, M.E. Sharpe, Inc., M.E. Sharpe, Inc., vol. 37(4), pages 64-79, December.
    9. Nogueira, Veridiana de Andrade & Mori, Rogério & Marçal, Emerson Fernandes, 2013. "Transmissão da variação cambial para as taxas de inflação no Brasil: estimação do pass-through através de modelos de vetores autorregressivos estruturais com correção de erros," Textos para discussão 349, Escola de Economia de São Paulo, Getulio Vargas Foundation (Brazil).
    10. Veridiana De Andrade Nogueira & Rogério Mori & Emerson Fernandes Marçal, 2014. "Transmissãoda Variação Cambial Para As Taxas De Inflação No Brasil: Estimação Dopass-Through Através De Modelos De Vetores Autorregressivos Estruturaiscom Correção De Erros," Anais do XL Encontro Nacional de Economia [Proceedings of the 40th Brazilian Economics Meeting], ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Grad 044, ANPEC - Associação Nacional dos Centros de Pósgraduação em Economia [Brazilian Association of Graduate Programs in Economics].
    11. Marie Briere & Ombretta Signori, 2013. "Hedging inflation risk in a developing economy: The case of Brazil," ULB Institutional Repository 2013/167772, ULB -- Universite Libre de Bruxelles.

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