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Supply Shocks and Monetary Policy: The Case of the Colombian Economy (2003-2023)

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  • Carlos David Alape Gamez

    (Universidad de los Andes)

Abstract

This article aims to analyze the effects of a negative supply shock on expected inflation, the intervention rate, and gross domestic product during the period 2003 to 2023 in Colombia. A vector autoregressive multivariate time series model is employed as an empirical approach. The research indicates that after a negative supply shock, there is a misalignment in the formation of economic expectations, leading to an increase in the monetary policy rate. This, in turn, has a detrimental impact on the evolution of the gross domestic product, while failing to effectively anchor the expectations of economic agents.

Suggested Citation

  • Carlos David Alape Gamez, 2025. "Supply Shocks and Monetary Policy: The Case of the Colombian Economy (2003-2023)," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 104, pages 147-181, November.
    • Handle: RePEc:lde:journl:y:2025:i:104:p:147-181
    DOI: 10.17533/udea.le.n104a357639
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    References listed on IDEAS

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    1. Kydland, Finn E & Prescott, Edward C, 1982. "Time to Build and Aggregate Fluctuations," Econometrica, Econometric Society, vol. 50(6), pages 1345-1370, November.
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    More about this item

    Keywords

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    JEL classification:

    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • D84 - Microeconomics - - Information, Knowledge, and Uncertainty - - - Expectations; Speculations

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