Monetary Neutrality in the Colombian Real Exchange Rate
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.
We identified and estimated a SVAR model in the real and nominal exchange rates through the Blanchard and Quah decomposition. This enables us to provide results regarding the magnitude and length of nominal and real shock effects in the real and nominal exchange rate. We estimate that the fundamental sources of real exchange rate fluctuations are real factors. Our first result is that the real effect of nominal shocks die out in less than six months. Second, we find that convergence time has decreased since the implementation of exchange rate bands.
