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Monetary and Exchange Rate Policies in Colombia: Progress and Challenges

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  • Sergio Clavijo

Abstract

This paper focuses on monetary and exchange rate policies in Colombia, with particular emphasis on the period 1999-2002, when flotation of the peso and inflation targeting were adopted. We argue, first, in favor of adopting "operational inflation target ranges" and, second, in favor of strengthening the current scheme of foreign exchange options. The impact of reductions in the reference rates of the Central Bank of Colombia is also assessed. We find that a lower central bank policy interest rate is likely to affect demand only if mortgage refinancing takes place. We present preliminary estimates of Taylor rules in an openeconomy framework for Colombia.

Suggested Citation

  • Sergio Clavijo, 2004. "Monetary and Exchange Rate Policies in Colombia: Progress and Challenges," IMF Working Papers 2004/166, International Monetary Fund.
    • Handle: RePEc:imf:imfwpa:2004/166
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    1. Javier Gómez & Juan Manuel Julio, 2001. "Transmission Mechanisms and Inflation Targeting: The Case of Colombia Disinflation," Borradores de Economia 168, Banco de la Republica de Colombia.
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    7. International Monetary Fund, 2002. "Colombia: Third Review Under the Extended Arrangement," IMF Staff Country Reports 2002/015, International Monetary Fund.
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    Cited by:

    1. International Monetary Fund, 2006. "Colombia; Selected Issues," IMF Staff Country Reports 06/401, International Monetary Fund.
    2. de Mello Luiz & Moccero Diego & Mogliani Matteo, 2013. "Do Latin American Central Bankers Behave Non-Linearly? The Experiences of Brazil, Chile, Colombia and Mexico," Studies in Nonlinear Dynamics & Econometrics, De Gruyter, vol. 17(2), pages 141-165, April.
    3. Luiz De Mello & Diego Moccero, 2009. "Monetary Policy and Inflation Expectations in Latin America: Long-Run Effects and Volatility Spillovers," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 41(8), pages 1671-1690, December.

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