IDEAS home Printed from https://ideas.repec.org/a/anp/econom/v15y2014i154_67.html
   My bibliography  Save this article

An empirical study of the substitution of foreign for domestic savings in Brazil

Author

Listed:
  • Luiz Carlos Bresser-Pereira

    (Fundacão Getúlio Vargas, Brazil)

  • Eliane Araújo

    (Universidade Estadual de Maringá and Research Fellow at CNPq, Brazil)

  • Paulo Gala

    (Fundacão Getúlio Vargas São Paulo School of Economics, Brazil)

Abstract

This study aims to investigate the relations between the level of the real exchange rate, foreign savings and domestic savings in Brazil. The appreciation of the domestic currency caused by financing the current account deficit reduces the expected profit rate in the tradable goods industry, leading to a drop in domestic savings and the substitution of foreign for domestic savings. An econometric analysis of the Brazilian economy indicates a stable long-term relation between the exchange rate and domestic savings, and that relative devaluations of the real exchange rate positively and significantly affect domestic savings in 1994–2013. The estimations’ results persist even after the period is divided into two samples, after tests showing the presence of a structural break in the model in 2002. In addition, the results of the estimations performed on the two samples confirm the presence of substitution of foreign for domestic saving.

Suggested Citation

  • Luiz Carlos Bresser-Pereira & Eliane Araújo & Paulo Gala, 2014. "An empirical study of the substitution of foreign for domestic savings in Brazil," Economia, ANPEC - Associação Nacional dos Centros de Pós-Graduação em Economia [Brazilian Association of Graduate Programs in Economics], vol. 15(1), pages 54-67.
    • Handle: RePEc:anp:econom:v:15:y:2014:i:1:54_67
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1517758014000095
    Download Restriction: no
    File URL: http://www.sciencedirect.com/science/article/pii/S1517758014000095/pdfft?md5=02c1cfc0e409b5c8fc29f7ab45a2227f&pid=1-s2.0-S1517758014000095-main.pdf
    Download Restriction: no
    ---><---

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Bresser-Pereira, Luiz Carlos & Feijó, Carmem & Araújo, Eliane Cristina de, 2022. "The determination of the exchange rate: a new-developmental approach," Textos para discussão 558, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).
    2. Vilma Deltuvaitė & Svatopluk Kapounek & Petr Koráb, 2019. "Impact of Behavioural Attention on the Households Foreign Currency Savings as a Response to the External Macroeconomic Shocks," Prague Economic Papers, Prague University of Economics and Business, vol. 2019(2), pages 155-177.
    3. repec:prg:jnlpep:v:preprint:id:690:p:1-23 is not listed on IDEAS
    4. Maciej Holko, 2017. "Oszczędności pracowników, rozwój rynku kapitału i inwestycje zagraniczne - rządowy plan rozwoju z perspektywy postkeynesowskiej," Gospodarka Narodowa. The Polish Journal of Economics, Warsaw School of Economics, issue 5, pages 5-30.
    5. Bresser-Pereira, Luiz Carlos, 2016. "Why the ‘Rest’ doesn’t need foreign finance," Textos para discussão 415, FGV EESP - Escola de Economia de São Paulo, Fundação Getulio Vargas (Brazil).

    More about this item

    Keywords

    Real exchange rate; Domestic savings; Foreign savings and economic development;
    All these keywords.

    JEL classification:

    • F3 - International Economics - - International Finance
    • F4 - International Economics - - Macroeconomic Aspects of International Trade and Finance
    • O2 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:anp:econom:v:15:y:2014:i:1:54_67. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Rodrigo Zadra Armond (email available below). General contact details of provider: https://edirc.repec.org/data/anpecea.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.