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Currency crises in Brazil: the role of the fundamentals and the rumours

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  • Joaquim Pinto De Andrade
  • Joseangelo Divino

Abstract

The paper aims at identification of the main explanatory factors of the currency crises in Brazil. Following Choueiri and Kaminsky (1997) a VAR monetary model is used and the historical decomposition procedure developed by Sims (1980) to evaluate the importance of the 'fundamentals' represented by fiscal/monetary and exchange-rate policies, and the 'external factors' represented by foreign interest rates and contagious effects. The main results show the importance of the exchange-rate management on the overall period and the contagious effects more recently to explain the Brazilian currency crises.

Suggested Citation

  • Joaquim Pinto De Andrade & Joseangelo Divino, 2001. "Currency crises in Brazil: the role of the fundamentals and the rumours," Applied Economics, Taylor & Francis Journals, vol. 33(7), pages 887-898.
    • Handle: RePEc:taf:applec:v:33:y:2001:i:7:p:887-898
    DOI: 10.1080/00036840121646
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    References listed on IDEAS

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    1. Graciela Kaminsky & Saul Lizondo & Carmen M. Reinhart, 1998. "Leading Indicators of Currency Crises," IMF Staff Papers, Palgrave Macmillan, vol. 45(1), pages 1-48, March.
    2. Ms. Nada Choueiri & Graciela Laura Kaminsky, 1999. "Has the Nature of Crises Changed? A Quarter Century of Currency Crises in Argentina," IMF Working Papers 1999/152, International Monetary Fund.
    3. Graciela Laura Kaminsky, 1997. "Leading Indicators of Currency Crises," IMF Working Papers 1997/079, International Monetary Fund.
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