In this paper it is analyzed the influence of the exchange rate movements on Brazil's current account from January 1995 to January 2006. The frequency of the data is monthly. The econometric treatment adopted was based on the cointegration analysis. By the application of the Divísia index the effects of the institutional changes on the calculated elasticities were removed. It can be concluded with acceptable certainty that without taking into consideration the institutional changes, the exchange rate variations exerted significant influence on the current account balance in the studied period. The mechanism of correction of error indicated that the unbalances of short term do need a relatively short time to be corrected.
exchange rate; imports; exports; institutional changes; elasticities; Brazil
