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Abstract
The Brazilian Trade Balance deficit in the 1990s was blamed on the adopted crawling-peg exchange rate regime in which the real exchange rate was supposedly appreciated. The purpose in this letter is to assess this relationship by using VEC-M model to check if Marshall–Lerner condition and J-curve phenomenon hold. The results indicate that the Marshall–Lerner condition holds and the J-curve would be present in the aftermath of a real exchange rate devaluation.
Acknowledgements
We are grateful for comments from the Editor, Afonso Henriques Borges Ferreira and Cleomar Gomes. Fabio Gomes are grateful for FAPERJ financial support.
