dos Santos, Cláudio Hamilton Matos Cieplinski, André Gaspar Pimentel, Débora Bhering, Gustavo
Year of Publication:
Texto para Discussão, Instituto de Pesquisa Econômica Aplicada (IPEA) 2046
In contrast to what both traditional economic theory and the conventional wisdom among most Brazilian macroeconomists would suggest, recent studies point to a low exchange rate elasticity of Brazilian imports. In this study we provide a rationale for this result by revisiting the behavior of imports disaggregated in seven different categories. According to the results reported in this paper, the low exchange rate elasticity of total imports reflects the low elasticities of intermediate goods, oil and fuel, and services such as transportation, royalties, and rents paid on machinery and equipment; which amount to about two thirds of aggregate Brazilian imports. We find that several of these imports have low or null possibility of substitution for national products, due to structural deficiencies in Brazilian productive capacity.
exchange rate elasticity of imports exchange rates disaggregated imports