DECOMPOSITION OF THE EFFECTS OF THE TERMS OF TRADE CHANGES ON THE BRAZILIAN INDUSTRY IN THE PERIOD FROM 2008 TO 2014

Abstract

This study analyses the effects of terms of trade changes on the industry in a recent period of the Brazilian economy (2008 to 2014). The goal is to identify the most sensitive industries to terms of trade and its impacts on production and sectoral employment. Using a dynamic computable general equilibrium (CGE) model, we have performed a historical simulation considering the observed values of the main macroeconomic variables including the terms of trade changes. Overall, the results indicated that the most affected sectors would be the ones related to heavy industry, natural resources intensive and labor intensive. The results also indicate that the terms of trade improvement in the period 2008-2011 was not relevant to the industry performance, while the terms of trade decrease in the period 2012-2014 was very important to the industrial performance.