External Adjustment and Equilibrium Exchange Rate in Brazil

October 1, 2006

Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary

This paper investigates the factors behind the significant improvement in Brazil's external accounts and wide fluctuations of the real exchange rate since the floating of the real in 1999. Particular attention is devoted to the strong appreciation of the real from 2003-05. Econometric estimates of of behavioral equilibrium exchange rate (BEER) model for Brazil show that most of this appreciation was an equilibrium response to improved economic fundamentals.

Subject: Current account, Exchange rates, Real effective exchange rates, Real exchange rates, Real interest rates

Keywords: Brazil, exchange rate, terms of trade, WP

Pages:
22
Volume:
2006
DOI:
https://doi.org/10.5089/9781451864816.001
Issue:
221
Series:
Working Paper No. 2006/221
Stock No:
WPIEA2006221
ISBN:
9781451864816
ISSN:
1018-5941

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