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EXCHANGE RATE: A STUDY ON THE APPLICABILITY OF THE MENTAL MODEL IN BRAZIL BETWEEN 2001 AND 2018

Paloma Almeida Silva () and Eduardo Strachman ()
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Paloma Almeida Silva: Universidade Estadual de Campinas

Revista de Economia Mackenzie (REM), 2021, vol. 18, issue 2, 159-192

Abstract: The following study aims to verify the applicability of the mental model to explain the dynamics of the exchange rate in Brazil from 2001 to 2018. The mental model was developed in 2009 by the American economist Jhon Harvey, to map and structure the expectations of the agents facing the foreign exchange market, which according to him corresponds to a relevant element in the determination and dynamics of the exchange rate. Therefore, the methodology used in this research consists in the application of the mental model, with the aid of descriptive statistics and simple comparative calculation. The results obtained in this study indicate that the post-Keynesian theory has a relevant relationship with the dynamics of the Brazilian nominal exchange rate. However, the same results make the precise statement about the applicability of the mental model to the Brazilian economy unfeasible, given that some of the variables identified as determinants, did not have a great influence on the nominal exchange rate in part of the studied period.

Keywords: Mental; model.; Expectations.; Exchange; rate.; Post-Keynesian; approach. (search for similar items in EconPapers)
JEL-codes: E03 E12 (search for similar items in EconPapers)
Date: 2021
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