Overvaluation trend of the Brazilian currency in the 2000s: empirical estimation

Revista de Economia Política

AndrÉ Nassif¹  Carmem FeijÓ¹  Eliane AraÚjo¹ 

关键词: real exchange rate;    economic policy dilemmas;    Brazil;    Taxa de câmbio real;    dilemas da política econômica;    Brasil;   

DOI  :  10.1590/0101-31572015v35n01a01

来源: SciELO

【 摘 要 】

The aim of this paper is to discuss the trend of overvaluation of the Brazilian currency in the 2000s, presenting an econometric model to estimate the real exchange rate (RER) and which should be a reference level of the RER to guide long-term economic policy. In the econometric model, we consider long-term structural and short-term components, both of which may be responsible for explaining overvaluation trend of the Brazilian currency. Our econometric exercise confirms that the Brazilian currency had been persistently overvalued throughout almost all of the period under analysis, and we suggest that the long-term reference level of the real exchange rate was reached in 2004. In July 2014, the average nominal exchange rate should have been around 2.90 Brazilian reais per dollar (against an observed nominal rate of 2.22 Brazilian reais per dollar) to achieve the 2004 real reference level (average of the year). That is, according to our estimates, in July 2014 the Brazilian real was overvalued at 30.6 per cent in real terms relative to the reference level. Based on these findings we conclude the paper suggesting a mix of policy instruments that should have been used in order to reverse the overvaluation trend of the Brazilian real exchange rate, including a target for reaching a real exchange rate in the medium and the long-run which would favor resource allocation toward more technological intensive sectors.

【 授权许可】

CC BY   
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