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Investment in the Brazilian manufacturing industry and the real exchange rate: An investigation using sectoral-level panel data

Author

Listed:
  • Carolina Troncoso Baltar
  • Celio Hiratuka
  • Gilberto Tadeu Lima

Abstract

This paper studies the impact of the real exchange rate on investment in the Brazilian industry. We develop a model that considers the effect of changes in the real exchange rate on the industrial investment. The determinants of the real exchange rate can affect differently the demand for the products and the industrial sectors’ competitiveness. The composition of these effects varies among industrial sectors, with different repercussions on investment. A panel data analysis is applied to estimate the model for the different Brazilian industrial sectors from 1996 to 2010 and the main result is that investment responsiveness to exchange rate varies among sectors.

Suggested Citation

  • Carolina Troncoso Baltar & Celio Hiratuka & Gilberto Tadeu Lima, 2014. "Investment in the Brazilian manufacturing industry and the real exchange rate: An investigation using sectoral-level panel data," Competence Centre on Money, Trade, Finance and Development 1408, Hochschule fuer Technik und Wirtschaft, Berlin.
    • Handle: RePEc:mtf:wpaper:1408
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    More about this item

    Keywords

    real exchange rate; investment;

    JEL classification:

    • E2 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment
    • O5 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies

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