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Is The Exchange Rate In Brazil Valid In The Long Term?

Author

Listed:
  • Douglas Alcantara Alencar

    (Universidade Estadual Paulista)

  • Eduardo Strachman

    (Universidade Estadual Paulista)

  • Fábio Pereira de Andrade

    (Universidade Anhembi Morumbi)

  • Fernando Henrique Taques

    (Centro Universitário das Faculdades Metropolitanas Unidas)

Abstract

The objective of this study was to test the validity of the real exchange rate in the long run. For that five tests were performed based on equation, which relates to real exchange rate, international trade, domestic income. The main difference is that the tests when we are working with quarterly data, the parameters are significantly different from zero – i.e., the variables real exchange rate, international trade, domestic income and net exports on long term relationship – and, moreover, the signs are as expected. This implies that it is possible to increase exports with currency devaluation. Thus, based on data and tests that work we conclude that the exchange rate is an important instrument of trade policy, given that devaluations are valid even in the long term.

Suggested Citation

  • Douglas Alcantara Alencar & Eduardo Strachman & Fábio Pereira de Andrade & Fernando Henrique Taques, 2013. "Is The Exchange Rate In Brazil Valid In The Long Term?," Revista de Economia Mackenzie (REM), Mackenzie Presbyterian University, Social and Applied Sciences Center, vol. 11(2), pages 10-45, May-Augus.
    • Handle: RePEc:aft:journl:v:11:2:may:aug:2013:p:10-45
    DOI: -
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