Financial Inefficiency and Real Business Cycle in Colombia
La serie Borradores de Economía es una publicación de la Subgerencia de Estudios Económicos del Banco de la República. Los trabajos son de carácter provisional, las opiniones y posibles errores son responsabilidad exclusiva del autor y sus contenidos no comprometen al Banco de la República ni a su Junta Directiva.
In a dynamic, stochastic, general equilibrium model, we explore the optimal response of the inhabitants of a closed economy to an inefficient ad hoc financial system that in its intermediation duty looses a fraction of agrégate savings which otherwise would become agrégate investment. The incidente over the cycle of shocks to average financial inefficiency and technology is analyzed, as well as the steady state welfare gain of a reduction in average financial inefficiency. The descriptive power of the model is assessed with Colombian data between 1970 and 1992. The results in the paper suggest that the model!s predictions are largely consistent with aggregate behaviour of the Colombian economy, making it possible to explore several issues of financial liberalization and deepening.
