An open economy model for Colombia: theoretical considerations, empirical aspects

In the context of modern globalisation, peripheral economies are affected not only by international real business cycles but also by the financial dynamics of advanced economies. This adds to each economy's internal and structural features, creating complexities and interrelationships between domestic and external actors. Stock-flow consistent (SFC) models attempt to close existing methodological gaps in macroeconomic modelling, analysing economies' real and financial spheres in an integrated way. This chapter describes the process of adapting and calibrating an SFC model in continuous time for the Colombian economy. It presents a detailed account of the empirical macroeconomic model developed, capturing most of the country's institutional characteristics. The primary objective of this model is to function as an analytical tool and support mechanism for a wide range of academic and policy debates, as demonstrated in subsequent chapters.