IDEAS home Printed from https://ideas.repec.org/p/bdr/borrec/1367.html

The Regional Effects of Monetary Policy in Colombia

Author

Listed:
  • Cristian David González-Téllez
  • Juan Camilo Laborde-Vera

Abstract

We estimate the regional effects of monetary policy in Colombia using exogenous monetary shocks and local projections. Contractionary shocks reduce inflation, economic activity, and employment across regions, but with substantial regional heterogeneity in the magnitude of these effects. We find a positive cross-sectional covariance between price and activity responses, which indicates that these differences primarily reflect variation in the sensitivity of local demand to monetary shocks rather than heterogeneity in regional supply elasticities. We find that the regional transmission of monetary policy is amplified by a greater financial leverage, trade openness, labor-market informality and sectoral specialization in mining. Our results show that a common monetary policy shock generates systematically unequal regional outcomes because differences in local economic structure shape the strength of monetary transmission. *** RESUMEN: We estimate the regional effects of monetary policy in Colombia using exogenous monetary shocks and local projections. Contractionary shocks reduce inflation, economic activity, and employment across regions, but with substantial regional heterogeneity in the magnitude of these effects. We find a positive cross-sectional covariance between price and activity responses, which indicates that these differences primarily reflect variation in the sensitivity of local demand to monetary shocks rather than heterogeneity in regional supply elasticities. We find that the regional transmission of monetary policy is amplified by a greater financial leverage, trade openness, labor-market informality and sectoral specialization in mining. Our results show that a common monetary policy shock generates systematically unequal regional outcomes because differences in local economic structure shape the strength of monetary transmission.

Suggested Citation

  • Cristian David González-Téllez & Juan Camilo Laborde-Vera, 2026. "The Regional Effects of Monetary Policy in Colombia," Borradores de Economia 1367, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:1367
    as

    Download full text from publisher

    File URL: https://repositorio.banrep.gov.co/bitstream/handle/20.500.12134/11441/be_1367.pdf
    Download Restriction: no
    ---><---

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;
    ;

    JEL classification:

    • E24 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - Employment; Unemployment; Wages; Intergenerational Income Distribution; Aggregate Human Capital; Aggregate Labor Productivity
    • E43 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Interest Rates: Determination, Term Structure, and Effects
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics
    • F45 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Macroeconomic Issues of Monetary Unions
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bdr:borrec:1367. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    We have no bibliographic references for this item. You can help adding them by using this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Clorith Angélica Bahos Olivera (email available below). General contact details of provider: https://edirc.repec.org/data/brcgvco.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.