Growth, Exchange Rates and Trade in Brazil: a Structuralist Post Keynesian Approach
This paper presents a structuralist post-Keynesian analysis of trade adjustment in Brazil. Based on the concept of the balance-of-payments (BoP) constraint on growth, the paper investigates the relationship between income growth and real-exchange-rate devaluation necessary to adjust trade to a foreign-exchange constraint. The main result is that, with price-inelastic and income-elastic imports and based on its trade structure in 2002, Brazil may have to compensate an additional 1% of income growth with approximately 7% of real-exchange-rate devaluation in order to keep its trade balance stable in relation to GDP in the near future. Moreover, the trade parameters of Brazil seem to be unfavorable to growth with stable trade, that is, even moderate rates of GDP expansion lead to a substantial increase of imports and, therefore, require an also substantial devaluation of the real exchange rate to avoid a deterioration of the trade balance.
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|Date of creation:||2003|
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|Order Information:|| Postal: Secretaria da ANPEC Rua Prof Marcos Valdemar de Freitas Reis s/n Campus do Gragoatá Bloco F Niterói, RJ 24210-201 Brazil|
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- Anthony P. Thirlwall, 2011.
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- Juan Carlos Moreno-Brid, 1999. "On Capital Flows and the Balance-of-Payments-Constrained Growth Model," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 21(2), pages 283-298, January.
- Nelson H. Barbosa Filho, 2001. "International Liquidity and Growth in Brazil," SCEPA working paper series. SCEPA's main areas of research are macroeconomic policy, inequality and poverty, and globalization. 2001-04, Schwartz Center for Economic Policy Analysis (SCEPA), The New School. Full references (including those not matched with items on IDEAS)
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