The structure introduced by Armington (1969) has been used to analyze trade policy in partial and general equilibrium models. The Armington elasticities, the degree of substitution between domestic and import goods are known to be important, but are seldom estimated empirically. Therefore, we...

In this paper we model foreign capital flow to Brazil as stemming from an investment decision that whose risk depends on the expected rate of loss of foreign reserves. This motivates the estimation of an empirical relationship between these two variables that is valid for "normal" periods (when...

The Brazilian exchange rate has suffered strong fluctuations in the last year. They resulted from the Argentina crises and the energetic crises which influenced expectations about the future value of this variable, however the fundamentals of the economy did not vary significantly. In this paper...