The political economy of exchange rate policy in Brazil: an empirical assessment

Detalhes bibliográficos
Autor(a) principal: Bonomo,Marco
Data de Publicação: 1999
Outros Autores: Terra,Cristina
Tipo de documento: Artigo
Idioma: eng
Título da fonte: Revista Brasileira de Economia (Online)
Texto Completo: http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0034-71401999000400001
Resumo: This paper investigates whether political economy factors contribute to explain the exchange rate policy in Brazil from 1964 to 1997. An analytical framework presents the tradeoff between the positive effect of a depreciated exchange rate on the balance of payments and its negative effect on inflation as driving force affecting exchange rate policy. The exchange rate policy resulting from this tradeoff depends on the political environment. We test our hypotheses by modeling the exchange rate disequilibrium level as a Markov switching model with time varying transition probabilities, and the influence of political economy variables on the transition probabilities is tested. The results support partially the predictions of our analytical framework. According to our statistical results there is an election cycle: the probability of having an overvalued exchange rate is higher in the months preceding elections, while the probability of having an undervalued exchange rate is higher in the months succeeding elections.
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spelling The political economy of exchange rate policy in Brazil: an empirical assessmenttaxa de câmbioeconomia políticaciclo eleitoralThis paper investigates whether political economy factors contribute to explain the exchange rate policy in Brazil from 1964 to 1997. An analytical framework presents the tradeoff between the positive effect of a depreciated exchange rate on the balance of payments and its negative effect on inflation as driving force affecting exchange rate policy. The exchange rate policy resulting from this tradeoff depends on the political environment. We test our hypotheses by modeling the exchange rate disequilibrium level as a Markov switching model with time varying transition probabilities, and the influence of political economy variables on the transition probabilities is tested. The results support partially the predictions of our analytical framework. According to our statistical results there is an election cycle: the probability of having an overvalued exchange rate is higher in the months preceding elections, while the probability of having an undervalued exchange rate is higher in the months succeeding elections.Fundação Getúlio Vargas1999-12-01info:eu-repo/semantics/articleinfo:eu-repo/semantics/publishedVersiontext/htmlhttp://old.scielo.br/scielo.php?script=sci_arttext&pid=S0034-71401999000400001Revista Brasileira de Economia v.53 n.4 1999reponame:Revista Brasileira de Economia (Online)instname:Fundação Getulio Vargas (FGV)instacron:FGV10.1590/S0034-71401999000400001info:eu-repo/semantics/openAccessBonomo,MarcoTerra,Cristinaeng2010-09-16T00:00:00Zoai:scielo:S0034-71401999000400001Revistahttp://bibliotecadigital.fgv.br/ojs/index.php/rbe/issue/archivehttps://old.scielo.br/oai/scielo-oai.php||rbe@fgv.br1806-91340034-7140opendoar:2010-09-16T00:00Revista Brasileira de Economia (Online) - Fundação Getulio Vargas (FGV)false
dc.title.none.fl_str_mv The political economy of exchange rate policy in Brazil: an empirical assessment
title The political economy of exchange rate policy in Brazil: an empirical assessment
spellingShingle The political economy of exchange rate policy in Brazil: an empirical assessment
Bonomo,Marco
taxa de câmbio
economia política
ciclo eleitoral
title_short The political economy of exchange rate policy in Brazil: an empirical assessment
title_full The political economy of exchange rate policy in Brazil: an empirical assessment
title_fullStr The political economy of exchange rate policy in Brazil: an empirical assessment
title_full_unstemmed The political economy of exchange rate policy in Brazil: an empirical assessment
title_sort The political economy of exchange rate policy in Brazil: an empirical assessment
author Bonomo,Marco
author_facet Bonomo,Marco
Terra,Cristina
author_role author
author2 Terra,Cristina
author2_role author
dc.contributor.author.fl_str_mv Bonomo,Marco
Terra,Cristina
dc.subject.por.fl_str_mv taxa de câmbio
economia política
ciclo eleitoral
topic taxa de câmbio
economia política
ciclo eleitoral
description This paper investigates whether political economy factors contribute to explain the exchange rate policy in Brazil from 1964 to 1997. An analytical framework presents the tradeoff between the positive effect of a depreciated exchange rate on the balance of payments and its negative effect on inflation as driving force affecting exchange rate policy. The exchange rate policy resulting from this tradeoff depends on the political environment. We test our hypotheses by modeling the exchange rate disequilibrium level as a Markov switching model with time varying transition probabilities, and the influence of political economy variables on the transition probabilities is tested. The results support partially the predictions of our analytical framework. According to our statistical results there is an election cycle: the probability of having an overvalued exchange rate is higher in the months preceding elections, while the probability of having an undervalued exchange rate is higher in the months succeeding elections.
publishDate 1999
dc.date.none.fl_str_mv 1999-12-01
dc.type.driver.fl_str_mv info:eu-repo/semantics/article
dc.type.status.fl_str_mv info:eu-repo/semantics/publishedVersion
format article
status_str publishedVersion
dc.identifier.uri.fl_str_mv http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0034-71401999000400001
url http://old.scielo.br/scielo.php?script=sci_arttext&pid=S0034-71401999000400001
dc.language.iso.fl_str_mv eng
language eng
dc.relation.none.fl_str_mv 10.1590/S0034-71401999000400001
dc.rights.driver.fl_str_mv info:eu-repo/semantics/openAccess
eu_rights_str_mv openAccess
dc.format.none.fl_str_mv text/html
dc.publisher.none.fl_str_mv Fundação Getúlio Vargas
publisher.none.fl_str_mv Fundação Getúlio Vargas
dc.source.none.fl_str_mv Revista Brasileira de Economia v.53 n.4 1999
reponame:Revista Brasileira de Economia (Online)
instname:Fundação Getulio Vargas (FGV)
instacron:FGV
instname_str Fundação Getulio Vargas (FGV)
instacron_str FGV
institution FGV
reponame_str Revista Brasileira de Economia (Online)
collection Revista Brasileira de Economia (Online)
repository.name.fl_str_mv Revista Brasileira de Economia (Online) - Fundação Getulio Vargas (FGV)
repository.mail.fl_str_mv ||rbe@fgv.br
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