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Effects of Reserve Requirements in an Inflation Targeting Regime: The Case of Colombia

The Colombian economy and financial system have coped reasonably well with the effects of the global financial crisis. Hence, “unconventional” policy measures have not been at the center of the policy decisions and discussions. Nominal short term interest rates have remained the main monetary...

Effects of foreign participation in the colombian local public debt market on domestic financial conditions

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.

 

Effectiveness of FX Intervention and the Flimsiness of Exchange rate Expectations

 

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

 

 

Digital Payments Adoption and the Demand for Cash: New International Evidence

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

 

Description of the Minutes and Monetary Policy Reports using Computational Linguistics tools

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.

 

Commodity Price Shocks and Inflation within An Optimal Monetary Policy Framework: The case of Colombia

A small open macroeconomic model, in which an optimal interest rate rule emerges to drive the inflation behavior, is used to model inflation within an inflation targeting framework. This set up is used to estimate the relationship between commodity prices shocks and the inflation process in a...

Commodity Price Fluctuations, Core Inflation and Policy Interest Rates

The world economy has recently been hit by commodity price fluctuations, with first round effects on noncore inflation and second round effects on core inflation. The policy response to commodity price fluctuations depends on the first and second round effects as well as on the strength of the...

Colombia‘s Recent History of Monetary Policy from 1990 to 2010

 

Changes in GDP’s measurement error volatility and response of the monetary policy rate: Two approaches

Using a stylized model in which output is measured with error, we derive the optimal policy response to the demand shock signal and to changes in the measurement error volatility from two different perspectives: the minimization of the expected loss (from which we derive the ‘standard’ policy)...

Changes in GDP’s measurement error volatility and response of the monetary policy rate: two approaches

Using a stylized model in which output is measured with error, we derive the optimal policy response to the demand shock signal and to changes in the measurement error volatility from two different perspectives: the minimization of the expected loss (from which we derive the ‘standard’ policy)...

Central Banks: Past, Present, Future

This paper looks at the question of central bank mandate and design in a larger historical context with the goal of understanding the rationale for the design of the European Central Bank (ECB), and also of developing a better understanding of how central banks will evolve over the next few...

Central Bank Independence and Foreign Exchange Policies in Latin America

The purpose of this paper is to analyze the links between central bank independence and foreing exchange policies, in the light of the recent experience of the major Latin American countries. To that end, the paper starts with a brief review of the literature on the subject. The second section...

Beyond Bubbles: The role of asset prices in early-warning indicators

Asset prices have recently become a common topic in economic debate. Nevertheless, much time has been spent in determining if they effectively exhibit a bubble component, and not in examining whether asset prices affectively contain relevant information concerning future market developments....

Banking Limits on Foreign Holdings: Disentangling the Portfolio Balance Channel

In this paper we analyze the effects of financial constraints on the exchange rate through the portfolio balance channel. Our contribution is twofold: First, we construct a tractable two-period general equilibrium model in which financial constraints inhibit capital flows. Hence, departures from...

Assessing Reserve Adequacy: The Colombian Case

International reserves are very important for emerging economies, as they allow to buffer possible liquidity vulnerabilities within a countries' balance of payments. Consequently, the issue of how many reserves should each country hold is a relevant issue for economic policy. The literature has...

Are Capital Controls and Central Bank Intervention Effective?

Capital controls and intervention in the foreign exchange market are two controversial policy options that many countries have adopted in the past in order to influence the exchange rate and moderate capital flows. Colombia has a long record in the use of these policies with mixed results and...

Announcements are not Enough: Foreign Exchange Intervention under Imperfect Credibility

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...

An Empirical Analysis of the Relationship between US and Colombian Long-Term Sovereign Bond Yields

We study the relationship between US and Colombian sovereign debt interest rates. We also evaluate the response of the Colombian long-term bond yield and other asset prices to shocks to the US long-term Treasury rate. Two empirical exercises are performed. First, we use a moving window linear...

An Empirical Analysis of the Relationship between US and Colombian Long-Term Sovereign Bond Yields

We study the relationship between US and Colombian sovereign debt interest rates between 2004 and 2013. We also evaluate the response of the Colombian long-term bond yield and other asset prices to shocks to the US long-term Treasury rate. Two empirical exercises are performed. First, we use a...

An Asset Allocation Framework with Tranches for Foreign Reserves

This document explores an alternative strategic asset allocation framework for foreign exchange reserves, whose main purpose is to maximize the risk-adjusted returns maintaining the objectives of liquidity and safety of a foreign reserves’ portfolio.   The overall portfolio can be fragmented...

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