Villamizar-Villegas, Mauricio

In the last four years, Colombia has faced some of the events that have had the greatest impact on economic performance in more than a century. The international price of oil fell to less than a third of its value between June 2014 and January 2016, and again between September 2018 and April…

Since the introduction of exchange rate flexibility and the inflation targeting regime in 1999, Banco de la República (BR), Colombia's monetary and exchange rate authority, has intervened assiduously in the foreign exchange market, except in the last five years.

Two FX policy issues are discussed based on the recent Colombian experience. First, the increased participation of foreign investors in local bond markets since 2014 induced a reassessment of international reserve adequacy. We present the resulting LCR-type methodology to evaluate…

Typically, central banks use a variety of individual models (or a combination of models) when forecasting inflation rates. Most of these require excessive amounts of data, time, and computational power; all of which are scarce when monetary authorities meet to decide over policy interventions.…

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

ABSTRACT

Most of the literature on the effectiveness of foreign exchange intervention has yet to reach a general consensus. In part, this is due to the different estimation methods in which exogenous variation is identified. In this sense, the use of heavily-dependent parametric models can sometimes…

Central banks in emerging countries frequently build-up (diminish) reserves while attempting to depreciate (appreciate) their domestic currencies. Even if these interventions are effective, they often entail various costs. Basu (2012), nonetheless, proposes a model in which the sole announcement…