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Why does natural resource abundance not always lead to better outcomes? Limited financial development versus political impatience

Is the failure of natural resource abundance to achieve better economic outcomes due to limited nancial development or scal policy short-termism? I answer this question in a precautionary savings model where both resource revenues and asset returns are uncertain. Calibrating for Colombia, I nd...

Uncovering the portfolio balance channel with the use of sovereign credit ratings

In this paper we study exchange rate effects due to shifts in the portfolio composition of the Colombian financial sector during 2003–2014. We first provide a theoretical understanding of the channel's transmission mechanism by modeling how the banking sector optimally allocates its portfolio...

Uncovering the Portfolio Balance Channel with the use of Sovereign Credit Ratings

In this paper we study exchange rate effects due to shifts in the portfolio composition of the Colombian financial sector during 2003-2014. We first provide a theoretical understanding of the channel's transmission mechanism by modeling how the banking sector optimally allocates its portfolio...

Uncertainty in the Money supply mechanism and interbank markets in Colombia

We set a dynamic stochastic model for the interbank daily market forfunds in Colombia. The framework features exogenous reserve requirements and requirement period, competitive trading among heterogeneouscommercial banks, daily open market operations held by the Central Bank(auctions and window...

Uncertainty in the Money Supply Mechanism and Interbank Markets in Colombia

We set a dynamic stochastic model for the interbank daily market for funds in Colombia. The framework features exogenous reserve requirements and requirement period, competitive trading among heterogeneous commercial banks, daily open market operations held by the Central Bank (auctions and...

Too-connected-to-fail Institutions and Payments System’s Stability: Assessing Challenges for Financial Authorities

The most recent episode of market turmoil exposed the limitations resulting from the traditional focus on too-big-to-fail institutions within an increasingly systemic-crisis-prone financial system, and encouraged the appearance of the too-connected-to-fail (TCTF) concept. The TCTF concept...

The Transmission Mechanism of Monetary Policy in Colombia Major Changes and Current Features

 

The Role of Canadian Financial Institutions in the Development of Colombia’s Financial Markets, 1896-1939

 

The Risk-taking Channel in Colombia Revisited

Levels of interest rates below historical norms may have enhanced financial instability in both developed and in developing economies during the 2000´s. The risk-taking channel of monetary transmission policy is a recent theory that explains the interaction between risk perceptions of the...

The Risk-Taking Channel and Monetary Transmission Mechanism in Colombia

The recent financial crisis has brought to the forefront the need of a better understanding of the transmission mechanisms of monetary policy. The main step forward in this direction has drawn on work aimed at stressing the role of the financial sector in this transmission. Particular emphasis...

The Risk-Taking Channel and Monetary Transmission Mechanism in Colombia

The recent financial crisis has brought to the forefront the need for a better understanding of the transmission mechanisms of monetary policy.

The International Cycle and Colombian Monetary Policy

The objective of this paper is to analyze how international cycles affect the real GDP cycle and so monetary policy decisions in Colombia. We estimate that cycles in world GDP, export prices and capital inflows are strongly associated with the Colombian business cycle both on impact and even...

The Interdependence between Credit and Real Business Cycles in Latin American Economies

In this document we estimate credit and GDP cycles for three Latin-American economies and study their relation in the time and frequency domains. Cycles are estimated in order to analyze their medium and short-term frequencies. We find that short-term cycles are usually more volatile than medium...

The Case for Macro Risk Budgeting and Portfolio Tranching in Reserves Management

SYSMO I: A Systemic Stress Model for the Colombian Financial System

 

The opinions contained in this document are the sole responsibility of the author and do not commit Banco de la República or its Board of Directors.

 

Optimal v. simple financial policy rules in a production economy with “liability dollarization”

We evaluate the effectiveness of financial policy rules in a small open economy with production, liability dollarization and “unconventional shocks” (global liquidity shifts and news about future fundamentals). Tradable and nontradable final goods are produced with tradable inputs. Debt is...

Optimal Monetary Policy and Asset Prices: the Case of Colombia

The unfolding of the 2007 world financial and economic crisis has highlighted the vulnerability of real economic activity to strong fluctuations in asset prices. Which is the optimal monetary policy in an economy like the Colombian that is exposed to swings in asset prices? What is the...

Optimal Monetary Policy and Asset Prices: The case of Colombia

The unfolding of the 2007 world financial and economic crisis has highlighted the vulnerability of real economic activity to strong fluctuations in asset prices. Which is the optimal monetary policy in an economy like the Colombian that is exposed to swings in asset prices?...

Monetary transmission under competing corporate finance regimes

The behavioral agent-based framework of De Grauwe and Gerba (2015) is extended to allow for a counterfactual exercise on the role of corporate finance arrangements for monetary transmission. Two alternative firm financial frictions are independently introduced: market-based and bank-based. We...

Interest Rate Pass-Through in Colombia: A Micro-Banking Perspective

The importance of the banking sector as a key player in interest rate passthrough has been recognized recently in literature concerning monetary policy transmission mechanisms. The interest rate channel, which operates when banks pass on changes in the monetary policy rate to interest rates for...

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