Economics of Planning

, Volume 27, Issue 3, pp 277–292 | Cite as

Exchange rate volatility in high inflation economies: An econometric study of Poland and Brazil

  • Renato G. FlôresJr.
  • Marcos De B. Monteiro
  • Ariane Szafarz


This paper analyses exchange rate series for Poland and Brazil. The Polish series, related to the period soon after the first liberalizing measures, presents a high volatility which is not accounted for by some selected ‘fundamentals’. The Brazilian series, though also keeping evidence of excessive volatility, is cointegrated with fundamentals similar to those of the Polish case. This raises the issue of a learning process taking place during persistent inflations. Unsuccessful one-shot stabilization plans can reinforce this process, leaving a lasting imprint in the excessive volatility pattern. The message seems clear, though maybe not easy to implement: agents take some time to learn to live in non-stable environments; to avoid this by one-shot measures — if unsuccessful — can have a very high cost and pre-empt future corrections.


Exchange Rate Paper Analyse Rate Series High Volatility Analyse Exchange 
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Copyright information

© Kluwer Academic Publishers 1994

Authors and Affiliations

  • Renato G. FlôresJr.
    • 1
  • Marcos De B. Monteiro
    • 2
  • Ariane Szafarz
    • 3
  1. 1.ULB, Bruxelles and EPGE/FGVRio de JaneiroBrazil
  2. 2.EPGE/FGVRio de JaneiroBrazil
  3. 3.CEME and ECARE, ULBBruxellesBelgium

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