Exchange Rate Behavior in the BRICS

Flavio Vilela Vieira () and Cleomar Gomes Da Silva

Brazilian Journal of Political Economy, 2024, vol. 44, issue 1, 125-144

Abstract: This article aims to investigate the behavior of exchange rate in the BRICScountries, with an emphasis on exchange rate passthrough and exchange rate determinationempirical models. By applying the ARDL Bounds Testing Approach Methodology, fromJanuary 2005 to December 2019. Our main results show that: i) there is a long runcointegration among the variables analyzed for all estimated models; ii) there is a very slowspeed of adjustment towards the long run equilibrium; iii) there is evidence of exchangerate passthrough to inflation mainly in the long run, but not as strong as before; iv) thereis no evidence of exchange rate overshooting; v) international reserve accumulation can beconsidered a partial explanation for the evidence of no exchange rate overshooting. JEL Classification: C22; F14; F17.

Keywords: Exchange rate; inflation; overshooting; passthrough; ARDL; cointegration (search for similar items in EconPapers)
Date: 2024
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