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Capital Flows and Financial Assets in Colombia: Recent Behavior, Consequences and Challenges for the Central Bank

Author

Listed:
  • Hernando Vargas

  • Carlos Varela

Abstract

This paper analyzes the evolution and impact of capital flows in Colombia over the past five years. An examination of the nature and composition of the capital flows indicates that to large extent they have originated in foreign direct investment, especially in the oil and mining sectors. The repercussions of capital flows for the stability and fragility of the financial system are also discussed. Finally, some of the challenges faced by the authorities in dealing with the implications of capital flows for the conduct of monetary and exchange rate policies are presented.

Suggested Citation

  • Hernando Vargas & Carlos Varela, 2008. "Capital Flows and Financial Assets in Colombia: Recent Behavior, Consequences and Challenges for the Central Bank," Borradores de Economia 502, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:502
    DOI: 10.32468/be.502
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    Cited by:

    1. León, Carlos & Machado, Clara & Sarmiento, Miguel, 2018. "Identifying central bank liquidity super-spreaders in interbank funds networks," Journal of Financial Stability, Elsevier, vol. 35(C), pages 75-92.
    2. Eduardo Sarmiento G. & Martha López, 2016. "Dutch Disease Exchange Rate Incidence over Profits of Traded and Nontraded Goods," Monetaria, Centro de Estudios Monetarios Latinoamericanos, CEMLA, vol. 0(1), pages 41-75, January-j.
    3. Maria Socorro Gochoco-Bautista & Juthathip Jongwanich & Jong-Wha Lee, 2012. "How Effective Are Capital Controls in Asia?," Asian Economic Papers, MIT Press, vol. 11(2), pages 122-143, Summer.
    4. Urrutia, Miguel & Hofstetter, Marc & Hamann, Franz, 2014. "Inflation Targeting in Colombia, 2002-2012," IDB Publications (Working Papers) 6394, Inter-American Development Bank.
    5. Martha López, 2015. "Asset price bubbles and monetary policy in a small open economy," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 33(77), pages 93-102, June.
    6. Yuvana Jaichand & Reneé van Eyden & Rangan Gupta, 2025. "Presidential Approval Ratings and Stock Market Performance in Latin America," Scottish Journal of Political Economy, Scottish Economic Society, vol. 72(4), September.
    7. Moreno, Ramón, 2011. "La formulación de políticas desde una perspectiva macroprudencial en economías emergentes," Revista Estudios Económicos, Banco Central de Reserva del Perú, issue 22, pages 21-40.
    8. Paola Morales-Acevedo, 2019. "Spillover Effects of Foreign Monetary Policy on the Foreign Indebtedness of Banks and Corporations," IHEID Working Papers 17-2019, Economics Section, The Graduate Institute of International Studies, revised 05 Nov 2019.
    9. Bank for International Settlements, 2009. "Capital flows and emerging market economies," CGFS Papers, Bank for International Settlements, number 33.
    10. León, C., 2015. "Financial stability from a network perspective," Other publications TiSEM bb2e4e44-e842-45c6-a946-4, Tilburg University, School of Economics and Management.

    More about this item

    Keywords

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    JEL classification:

    • E50 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - General
    • F32 - International Economics - - International Finance - - - Current Account Adjustment; Short-term Capital Movements
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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