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Monetary and Exchange Rate Policies in Colombia

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  • Sergio Clavijo
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    Abstract

    This paper focuses on monetary and exchange rate policies in Colombia, with particular emphasis on the period 1999-2002, when flotation of the peso and inflation targeting were adopted. We argue, first, in favor of adopting "operational inflation target ranges" and, second, in favor of strengthening the current scheme of foreign exchange options. The impact of reductions in the reference rates of the Central Bank of Colombia is also assessed. We find that a lower central bank policy interest rate is likely to affect demand only if mortgage refinancing takes place. We present preliminary estimates of Taylor rules in an openeconomy framework for Colombia.

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    Bibliographic Info

    Paper provided by International Monetary Fund in its series IMF Working Papers with number 04/166.

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    Length: 28
    Date of creation: 01 Sep 2004
    Date of revision:
    Handle: RePEc:imf:imfwpa:04/166

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    Related research

    Keywords: Central bank role; inflation; monetary policy; central bank; inflation targeting; aggregate demand; monetary aggregates; monetary base; inflation target; foreign exchange; real interest rate; monetary fund; real interest rates; monetary policy rule; inflation rate; nominal interest rate; macroeconomic performance; annual inflation; inflationary policy; monetary institutions; monetary policies; low inflation; monetary aggregate; monetary economics; monetary targets; terms of trade; monetary stance; moderate inflation; inflationary expectations; price level; monetary instruments; effect of inflation; money base; domestic aggregate demand; treasury securities; price inflation; independent central bank; monetary conditions; monetarism; monetary policy rules; real output; price stability; open market operations; foreign currency; monetary issue; monetary expansion; monetary uncertainty;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Guy Debelle & Miguel A. Savastano & Paul R. Masson & Sunil Sharma, 1998. "Inflation Targeting as a Framework for Monetary Policy," IMF Economic Issues 15, International Monetary Fund.
    2. Javier Gómez & Juan Manuel Julio, . "Transmission Mechanisms and Inflation Targeting: The Case of Colombia Disinflation," Borradores de Economia 168, Banco de la Republica de Colombia.
    3. Woodford, Michael, 2001. "Fiscal Requirements for Price Stability," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 33(3), pages 669-728, August.
    4. Karl E. Case & John M. Quigley & Robert J. Shiller, 2001. "Comparing Wealth Effects: The Stock Market versus the Housing Market," Cowles Foundation Discussion Papers 1335, Cowles Foundation for Research in Economics, Yale University.
    5. Glenn D. Rudebusch, 1999. "Is the Fed too timid? Monetary policy in an uncertain world," Working Papers in Applied Economic Theory 99-05, Federal Reserve Bank of San Francisco.
    6. Taylor, John B., 1993. "Discretion versus policy rules in practice," Carnegie-Rochester Conference Series on Public Policy, Elsevier, vol. 39(1), pages 195-214, December.
    7. Svensson, Lars E. O., 2002. "Inflation targeting: Should it be modeled as an instrument rule or a targeting rule?," European Economic Review, Elsevier, vol. 46(4-5), pages 771-780, May.
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