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The Rise And Perpetuation Of A Moderate Inflation, Colombia 1970-1991

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  • Juan Carlos Echeverry G.

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Abstract

Colombian inflationary experience is explained using a theoretical model that stresses two elements: the effect of shocks and the type of policy designed to respond to them. The empirical investigation uses the event-study methodology and finds that the model successfully accounts for the main characteristics of the country's inflationary process; foreign exchange reserves, agricultural and policy shocks, as well as lack of commitment to low infaltion by the authorities are the main causes behind the sustained high/moderate level of inflation. As assessment of the costs of inflation and price variability, widely documented for other countries, is not found during the periods of high but stable inflation in Colombia.

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Bibliographic Info

Paper provided by BANCO DE LA REPÚBLICA in its series BORRADORES DE ECONOMIA with number 003621.

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Length: 84
Date of creation: 30 Apr 1996
Date of revision:
Handle: RePEc:col:000094:003621

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  1. Robert J. Barro & David B. Gordon, 1981. "A Positive Theory of Monetary Policy in a Natural-Rate Model," NBER Working Papers 0807, National Bureau of Economic Research, Inc.
  2. Christina D. Romer & David H. Romer, 1989. "Does Monetary Policy Matter? A New Test in the Spirit of Friedman and Schwartz," NBER Chapters, in: NBER Macroeconomics Annual 1989, Volume 4, pages 121-184 National Bureau of Economic Research, Inc.
  3. Carmen M Reinhart & Vincent R Reinhart, 1991. "Fluctuaciones Del Producto Y Choque Monetarios: Evidencia Colombiana," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  4. José Darío Uribe, 1994. "Inflación Inercial , Tasa De Cambio Y Anclas," BORRADORES DE ECONOMIA 002849, BANCO DE LA REPÚBLICA.
  5. Juan Manuel Julio R., 1995. "Choques Grandes/Choques Pequeños: Evidencia Del Log Ipc E Inflación Colombianos," BORRADORES DE ECONOMIA 002120, BANCO DE LA REPÚBLICA.
  6. Natalia Salazar, 1992. "El efecto Tanzi, la sustitución de monedas y la tasa de inflación óptima en Colombia," ENSAYOS SOBRE POLÍTICA ECONÓMICA, BANCO DE LA REPÚBLICA - ESPE.
  7. Fischer, Stanley & Summers, Lawrence H, 1989. "Should Governments Learn to Live with Inflation?," American Economic Review, American Economic Association, vol. 79(2), pages 382-87, May.
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  10. Cooley, Thomas F & Hansen, Gary D, 1991. "The Welfare Costs of Moderate Inflations," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 23(3), pages 483-503, August.
  11. Martin Evans & Paul Wachtel, 1993. "Inflation regimes and the sources of inflation uncertainty," Proceedings, Federal Reserve Bank of Cleveland, pages 475-520.
  12. Fischer, Stanley, 1981. "Towards an understanding of the costs of inflation: II," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 15(1), pages 5-41, January.
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  16. Kiguel, Miguel A & Liviatan, Nissan, 1992. "When Do Heterodox Stabilization Programs Work? Lessons from Experience," World Bank Research Observer, World Bank Group, vol. 7(1), pages 35-57, January.
  17. Laurence Ball, 1990. "Why Does High Inflation Raise Inflation Uncertainty?," NBER Working Papers 3224, National Bureau of Economic Research, Inc.
  18. Lach, Saul & Tsiddon, Daniel, 1992. "The Behavior of Prices and Inflation: An Empirical Analysis of Disaggregated Price Data," Journal of Political Economy, University of Chicago Press, vol. 100(2), pages 349-89, April.
  19. Kydland, Finn E & Prescott, Edward C, 1977. "Rules Rather Than Discretion: The Inconsistency of Optimal Plans," Journal of Political Economy, University of Chicago Press, vol. 85(3), pages 473-91, June.
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  21. Kiseok Lee & Shawn Ni, 1995. "Inflation uncertainty and real economic activities," Applied Economics Letters, Taylor & Francis Journals, vol. 2(11), pages 460-462.
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Cited by:
  1. Juan C. Jaramillo & Roberto Steiner & Natalia Salazar, 1999. "The political economy of exchange rate policy in Colombia," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 009194, FEDESARROLLO.

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