Trade Elasticities and Market Expectations in Brazil
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Summary:
This paper provides econometric estimates of trade elasticities for Brazil obtained through cointegration and vector auto regression models and controlling for the effects of exchange rate volatility, capacity utilization, and changes in import tariffs. The results suggest that (i) recent market expectations may have been unduly pessimistic regarding the responsiveness of Brazil's trade flows to the real exchange rate, but (ii) the GDP growth rates targeted by the new government may put downward pressure on the exchange rate and thus render the achievement of official inflation targets considerably more difficult if structural reforms are not implemented.
Series:
Working Paper No. 2003/140
Subject:
Capacity utilization Exchange rates Exports Foreign exchange Imports International trade Production Real effective exchange rates
English
Publication Date:
July 1, 2003
ISBN/ISSN:
9781451856149/1018-5941
Stock No:
WPIEA1402003
Pages:
23
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