The Brazilian Trade Balance deficit in the 1990s was blamed on the adopted crawling-peg exchange rate regime in which the real exchange rate was supposedly appreciated. The purpose in this letter is to assess this relationship by using VEC-M model to check if Marshall - Lerner condition and J-curve phenomenon hold. The results indicate that the Marshall - Lerner condition holds and the J-curve would be present in the aftermath of a real exchange rate devaluation.
ASJC Scopus subject areas
- Economics and Econometrics