Equilibrium Real Exchange Rate In Brazil Estimation And Policy Implications
AbstractThis paper examines the determinants of the real effective exchange rate (REER) in Brazil, from 1994 to 2003. Building on a standard theoretical model and based on the Johansen cointegration estimation, the main finding is that much of the long-run behavior of the REER can be explained by relative productivity differentials, real commodity prices, government expenditures on tradables and non-tradables, trade openness and real interest differentials. On the basis of these fundamentals, the level of misalignment of the Real was found to be surprisingly modest during the Real Plan (1994-1998). As of end 2003, the Real was found to be slightly appreciated with respect to the estimated equilibrium level, although the extent of the misalignment appears to be small as well. The paper also discusses the implications of these findings with regard to trade competitiveness.
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Bibliographic InfoPaper provided by EconWPA in its series International Trade with number 0502013.
Length: 34 pages
Date of creation: 23 Feb 2005
Date of revision:
Note: Type of Document - pdf; pages: 34
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Brazil; Real Exchange Rate; Trade;
Find related papers by JEL classification:
- F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
- F31 - International Economics - - International Finance - - - Foreign Exchange
- F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
This paper has been announced in the following NEP Reports:
- NEP-ALL-2005-04-16 (All new papers)
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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