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Efficient Policy Rule For Inflation Targeting In Colombia

Author

Listed:
  • Martha L�pez P.

Abstract

In a small macroeconomic model of the Colombian economy I investigate the problem of selecting a policy rule that is consistent with inflation targeting. I spell out the characteristics of the optimal feedback and output parameters in the rule, as well as for the optimal forecasting horizon for inflation targeting. Using stochastic simulations of the model it is found that, as expected, rules that use forecasts of inflation rather than just contemporaneous inflation have better stabilization properties.

Suggested Citation

  • Martha L�pez P., 2003. "Efficient Policy Rule For Inflation Targeting In Colombia," Borradores de Economia 2437, Banco de la Republica.
    • Handle: RePEc:col:000094:002437
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    Cited by:

    1. Pietro Bonaldi & Andr�s Gonz�lez & Diego Rodr�guez, 2011. "Importancia de las rigideces nominales y reales en Colombia: un enfoque de equilibrio general dinámico y estocástico," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 29(66), pages 48-78.
    2. Mr. Daniel Leigh, 2008. "Achieving a Soft Landing: The Role of Fiscal Policy," IMF Working Papers 2008/069, International Monetary Fund.
    3. Andrés Felipe Giraldo & Martha Misas Arango & Edgar Villa P�rez, 2011. "Reconstructing the recent monetary policy history of Colombia from 1990 to 2010," Vniversitas Económica, Universidad Javeriana - Bogotá, vol. 0(0), pages 1-38.
    4. Gloria Lucía Bernal Nisperuza & Johanna Táutiva Pradere, 2008. "Relevancia de los datos en tiempo real en la estimación de la regla de Taylor para Colombia," Documentos de Economía 5421, Universidad Javeriana - Bogotá.
    5. Urrutia, Miguel & Hofstetter, Marc & Hamann, Franz, 2014. "Inflation Targeting in Colombia, 2002-2012," IDB Publications (Working Papers) 6394, Inter-American Development Bank.
    6. Andrés Felipe Giraldo Palomino, 2008. "Aversión a la inflación y regla de Taylor en Colombia 1994-2005," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID.
    7. Andrés Giraldo & Martha Misas & Edgar Villa, 2012. "Reconstructing Colombia‘s Recent History of Monetary Policy from 1990 to 2010," Revista ESPE - Ensayos sobre Política Económica, Banco de la Republica de Colombia, vol. 30(67), pages 56-103, July.
    8. Juan Manuel Julio Rom�n, 2006. "The Monetary Policy Rule During The Transition Toa Stable Lvel Of Inflation: The Case Of Colombia," Borradores de Economia 3613, Banco de la Republica.
    9. Edgar Villa & Martha A. Misas & Andrés F. Giraldo, 2014. "Inflation Targeting and an Optimal Taylor Rule for an Open Economy: Evidence for Colombia 1990-2011," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 51(1), pages 41-83, May.
    10. Andrés Felipe Giraldo Palomino, 2010. "Aspectos institucionales de la Banca Central en Colombia (1963-2007)," Revista Cuadernos de Economia, Universidad Nacional de Colombia, FCE, CID.
    11. Gloria Lucía Bernal Nisperuza & Johanna Táutiva Pradere, 2011. "Datos en tiempo real:una aplicación a la regla de taylor en Colombia," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 13(24), pages 373-394, January-J.

    More about this item

    JEL classification:

    • C45 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Neural Networks and Related Topics
    • E41 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Demand for Money
    • E47 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Forecasting and Simulation: Models and Applications

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