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A Model Of The Nominal And Real Exchange Rates In Colombia

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  • javier Gómez P.

    ()

Abstract

Using the johansens cointegration technique we develop an empirical model of the nominal and real exchange rates of Colombia. We find that the nominal exchange rate is determined by the nominal variables and the fundamentals and that the real exchange rate is determined by the fundamentals but neutral to the nominal variables. Changes in the real exchange rates take place through changes in the nominal exchange rate, thus the nominal and the real exchanges are correlated, however, the real exchange rate may not be modified by nominal exchange rate policy because, in the model, the nominal exchange rate is endogenous. We find that in the long run the nominal exchange rate of Colombia behaves as if it were flexible and the nominal anchor were money.

Suggested Citation

  • javier Gómez P., 1999. "A Model Of The Nominal And Real Exchange Rates In Colombia," BORRADORES DE ECONOMIA 001923, BANCO DE LA REPÚBLICA.
  • Handle: RePEc:col:000094:001923
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    Cited by:

    1. Javier G. Gómez-Pineda, 2016. "Inflación de costos: las devaluaciones de los años cincuenta y el brote populista de 1963," Borradores de Economia 924, Banco de la Republica de Colombia.
    2. Javier G. Gómez-Pineda, 2016. "Inflación de costos: las devaluaciones de los años cincuenta y el brote populista de 1963 / Cost-push inflation: the devaluations of the fifties and the 1963 populist outbreak," BORRADORES DE ECONOMIA 014204, BANCO DE LA REPÚBLICA.

    More about this item

    Keywords

    Exchange rates;

    JEL classification:

    • F31 - International Economics - - International Finance - - - Foreign Exchange
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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