The industrial equilibrium exchange rate in 2000: an estimation

Vol. 32 No. 4 (2012)

Oct-Dec / 2012
Published October 1, 2012
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PDF-English

How to Cite

Marconi, Nelson. 2012. “The Industrial Equilibrium Exchange Rate in 2000: An Estimation”. Brazilian Journal of Political Economy 32 (4):656-69. https://centrodeeconomiapolitica.org.br/repojs/index.php/journal/article/view/375.
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The industrial equilibrium exchange rate in 2000: an estimation

Nelson Marconi
From the São Paulo School of Economics of the Getulio Vargas Foundation and the Catholic University of São Paulo.
Brazilian Journal of Political Economy, Vol. 32 No. 4 (2012), Oct-Dec / 2012, Pages 656-669

Abstract

This paper presents a methodology for calculating the industrial equilibrium exchange rate, which is defined as the one enabling exporters of state-of-the-art manufactured goods to be competitive abroad. The first section highlights the causes and problems of overvalued exchange rates, particularly the Dutch disease issue, which is neutralized when the exchange rate strikes the industrial equilibrium level. This level is defined by the ratio between the unit labor cost in the country under consideration and in competing countries. Finally, the evolution of this exchange rate in the Brazilian economy is estimated.

JEL Classification: F43; O11; O14; O24.


Keywords: exchange rate Dutch disease deindustrialization economic development

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