Download or read book Trade Elasticities and Market Expectations in Brazil written by Mr.Claudio Paiva and published by International Monetary Fund. This book was released on 2003-07-01 with total page 24 pages. Available in PDF, EPUB and Kindle. Book excerpt: This paper provides econometric estimates of trade elasticities for Brazil obtained through cointegration and vector auto regression models and controlling for the effects of exchange rate volatility, capacity utilization, and changes in import tariffs. The results suggest that (i) recent market expectations may have been unduly pessimistic regarding the responsiveness of Brazil's trade flows to the real exchange rate, but (ii) the GDP growth rates targeted by the new government may put downward pressure on the exchange rate and thus render the achievement of official inflation targets considerably more difficult if structural reforms are not implemented.