Current account balance and the real exchange rate: the Brazilian case in the last two decades
DOI:
https://doi.org/10.11606/1413-8050/ea222285Keywords:
exchange rate, Real Plan, stabilization, trade deficitAbstract
This paper focus on the existence of a long-term equilibrium between real exchange rate and current account balance. It applies a structural model to understand the relationship among the movements of current account deficit, real exchange rate, national income and world trade. Thus, it will be possible to test for a long-run relation among these variables movements as well as the short-term disequilibrium effects on the current account deficit. The empirical part of this paper applies the Johansen procedure with the objective to find cointegration relations among the variables mentioned. This analysis will permit to separate long- run relation from short-term dynamics in such a way as to permit to understand the impact of shocks on the equilibrium relation among the variables.
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