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Strong hysteresis in Brazilian imports: a panel cointegration approach

Author

Listed:
  • Diogo de Prince
  • Sérgio Kannebley Junior

Abstract

Purpose - The purpose of this paper is to investigate the hysteresis hypothesis for the price and quantity of Brazilian imports in recent years. Design/methodology/approach - The empirical measure of strong macro hysteresis, as developed by Piscitelliet al., was incorporated into import demand and pass‐through panel cointegration equations. Findings - The results show that the number of sectors that do not reject hysteresis is larger for the import price than for the demand for imported goods. The evidence supports Dixit's idea that the presence of hysteresis should diminish the degree of pass‐through. Correcting for hysteresis makes quantity and price of imports more sensitive to exchange rate variations. Originality/value - This paper contributes to the literature by introducing Piscitelliet al.'s measure to test the hysteresis hypothesis in import prices and quantity.

Suggested Citation

  • Diogo de Prince & Sérgio Kannebley Junior, 2013. "Strong hysteresis in Brazilian imports: a panel cointegration approach," Journal of Economic Studies, Emerald Group Publishing Limited, vol. 40(4), pages 528-548, August.
    • Handle: RePEc:eme:jespps:v:40:y:2013:i:4:p:528-548
    DOI: 10.1108/JES-01-2011-0010
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    Citations

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    Cited by:

    1. Belke, Ansgar & Kronen, Dominik, 2017. "Exchange rate bands of inaction and hysteresis in EU exports to the global economy: The role of uncertainty," Ruhr Economic Papers 695, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    2. Jolita Adamonis & Matthias Göcke, 2019. "Modelling economic hysteresis losses caused by sunk adjustment costs," Journal of Post Keynesian Economics, Taylor & Francis Journals, vol. 42(2), pages 299-318, April.
    3. Lucas dos Santos Lourenço & Claudio Roberto Fóffano Vasconcelos, 2019. "Impacts of exchange rate non-linearity on Brazilian foreign trade," International Economics and Economic Policy, Springer, vol. 16(4), pages 679-699, October.

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