## External Adjustment and Equilibrium Exchange Rate in Brazil

_IMF Working Papers, October 1, 2006_

## Source details

**Canonical URL:** [External Adjustment and Equilibrium Exchange Rate in Brazil](https://www.imf.org/en/publications/wp/issues/2016/12/31/external-adjustment-and-equilibrium-exchange-rate-in-brazil-19869)

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## Bibliographic details
- Authors: Claudio A Paiva
- Published: October 1, 2006
- Series: IMF Working Papers
- DOI: https://doi.org/10.5089/9781451864816.001

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### 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.

### Main findings and analysis
- Investigation focus:
  - Improvement in Brazil's external accounts since the floating of the real in 1999.
  - Wide fluctuations of the real exchange rate, with emphasis on the strong appreciation from 2003-05.
- Econometric evidence:
  - A behavioral equilibrium exchange rate (BEER) model for Brazil was estimated.
  - The BEER estimates indicate that most of the 2003-05 appreciation of the real was an equilibrium response to improved economic fundamentals.

### Subjects and keywords
- Subjects: Current account, Exchange rates, Real effective exchange rates, Real exchange rates, Real interest rates
- Keywords: Brazil, exchange rate, terms of trade, WP

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_Source: https://www.imf.org/en/publications/wp/issues/2016/12/31/external-adjustment-and-equilibrium-exchange-rate-in-brazil-19869_