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Title:Three essays on the black market for the Dollar in Brazil
Author(s):Holanda, Marcos Costa
Doctoral Committee Chair(s):Baer, Werner W.
Department / Program:Economics
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Economics, Finance
Abstract:The existence of black markets for foreign exchanges has been a common characteristic of economies of many developing countries. These markets surge as a direct consequence of adoption of exchange rate controls in economies facing substantial macroeconomic imbalances.
The present work performs an empirical analysis about the black market for the Dollar in Brazil. The first essay examines the interaction between high premia on the black market for the Dollar and illegal trade. It concludes that the data support the hypothesis of illegal trade through the underinvoicing of exports and overinvoicing of imports. It also concludes that during the 1980's illegal trade accounted for a significant portion of the country's international trade.
The second essay deals with the modelling of the black market exchange rate. The study shows that traditional exchange rate models perform well in describing the behavior of the real exchange rate. The real exchange rate series is found to be stationary. The results obtained do not support the view that the black market for the Dollar is overwhelmingly influenced by The Central Bank interventions.
The stationarity of the real exchange rate series supports the Purchasing Power Parity Theory as a theory for the determination of the nominal exchange rate. The third essay goes further in this conclusion and investigates the way the inflation rate and the exchange rate interact with each other. The essay presents evidences that it is possible to have a situation in which changes in the exchange rate are a cause, and not a consequence, of inflation.
Issue Date:1994
Rights Information:Copyright 1994 Holanda, Marcos Costa
Date Available in IDEALS:2011-05-07
Identifier in Online Catalog:AAI9416369
OCLC Identifier:(UMI)AAI9416369

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