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|
|Date of revision:|
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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 Philip Thirlwall, 1979.
"The Balance of Payments Constraint as an Explanation of International Growth Rate Differences,"
BNL Quarterly Review,
Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
- Anthony P. Thirlwall, 2011. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," PSL Quarterly Review, Economia civile, vol. 64(259), pages 429-438.
- Anthony Philip Thirlwall, 1979. "The Balance of Payments Constraint as an Explanation of International Growth Rate Differences," Banca Nazionale del Lavoro Quarterly Review, Banca Nazionale del Lavoro, vol. 32(128), pages 45-53.
- Isard,Peter, 1995. "Exchange Rate Economics," Cambridge Books, Cambridge University Press, number 9780521466004, November.
- 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.
- Thirlwall, Anthony P & Hussain, Mohammed Nureldin, 1982. "The Balance of Payments Constraint, Capital Flows and Growth Rate Differences between Developing Countries," Oxford Economic Papers, Oxford University Press, vol. 34(3), pages 498-510, November.
- Isard,Peter, 1995. "Exchange Rate Economics," Cambridge Books, Cambridge University Press, number 9780521460477, November.
- 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.
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