Cyclical Fluctuations in Brazil's Real Exchange Rate: The Role of Domestic and External Factors
Electronic Access:
Free Download. Use the free Adobe Acrobat Reader to view this PDF file
Summary:
This paper examines the effects of capital inflows and domestic factors on Brazil’s real exchange rate. It describes the analytical framework, and then estimates a near-VAR model linking capital flows, interest rate differentials, government spending, money-base velocity, and the temporary component of the real exchange rate (TCRER). Generalized variance decompositions indicate that world interest rate shocks largely explain medium-term fluctuations in capital flows and the TCRER. Generalized impulse response functions show that a reduction in the world interest rate (and, to a lesser extent, an increase in government spending) have significant effects on the TCRER and capital flows.
Series:
Working Paper No. 1997/128
Subject:
Balance of payments Capital flows Capital inflows Consumption External debt Foreign exchange National accounts Real exchange rates
English
Publication Date:
October 1, 1997
ISBN/ISSN:
9781451935486/1018-5941
Stock No:
WPIEA1281997
Pages:
32
Please address any questions about this title to publications@imf.org