Real exchange rate, financial support and exports in Brazil: estimation of the sector export equation with implicit exchange rates

Vol. 39 No. 4 (2019)

Oct-Dec / 2019
Published October 1, 2019
PDF-Portuguese (Português (Brasil))
PDF-Portuguese (Português (Brasil))

How to Cite

Freire, Débora, Marco Flávio Cunha Resende, and Gustavo Britto. 2019. “Real Exchange Rate, Financial Support and Exports in Brazil: Estimation of the Sector Export Equation With Implicit Exchange Rates”. Brazilian Journal of Political Economy 39 (4):591-613. https://doi.org/10.1590/0101-35172009-2841.

Real exchange rate, financial support and exports in Brazil: estimation of the sector export equation with implicit exchange rates

Débora Freire
Professora do Departamento de Economia e do Centro de Centro de Desenvolvimento e Planejamento Regional da Universidade Federal de Minas Gerias – CEDEPLAR/UFGM, Belo Horizonte/MG, Brasil.
Marco Flávio Cunha Resende
Professor do Departamento de Economia Departamento de Economia e do Centro de Desenvolvimento e Planejamento Regional da Universidade Federal de Minas Gerias – CEDEPLAR/UFGM, Belo Horizonte/MG, Brasil.
Gustavo Britto
Professor do Departamento de Economia e do Centro de Desenvolvimento e Planejamento Regional da Universidade Federal de Minas Gerias – CEDEPLAR/UFGM, Belo Horizonte/MG, Brasil.
Brazilian Journal of Political Economy, Vol. 39 No. 4 (2019), Oct-Dec / 2019, Pages 591-613

Abstract

This paper assesses the relevance of export incentives in Brazil from 2004 and 2011. Departing from the hypothesis that exports profitability and incentives depend not only on the level of the real exchange rate and world income, but also on potential financial income obtained from such export incentives, the study calculates implicit exchange rates by sectors. The objective is to test the hypothesis that, together with the traditional variables of an export function, it is the adjusted implicit exchange rate, not the real exchange rate, the relevant variable to explain the level of sectoral exports in Brazil. Hence, two export equations are estimated using panel data, each one contemplating one of the available exchange rates. The results show that the implicit exchange rate is indeed relevant to explain exports and stress the importance of exports incentives.

Classificação JEL: E60; F13; H20.


Keywords: Export support policies implicit real exchange rate exports panel data