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Greater female labor force participation would help mitigate the challenges posed by population aging, which is one of the most pressing issues facing major economies worldwide.  

"This study integrates the notions of level and dependence to assess the degree of de-anchoring of inflation expectations in Colombia." 

When weather shocks are persistent --As in the extreme scenario-- they generate more lasting inflationary pressures that justify more restrictive monetary policy responses, albeit with higher costs in terms of economic activity. 

AbstractThe Global Financial Cycle (GFC), defined as the fluctuations in international capital flows, asset prices, and risk appetite, has garnered significant attention from the recent international finance literature, market practitioners, and policymakers. This study employs a Dynamic…

Abstract

AbstractFiscal policy and monetary policy are intricately connected, as government policies influence various macroeconomic variables, affecting prices and, consequently, Central Bank decisions. To elucidate this relationship, this document outlines the model employed by Banco de la República’s…

Expectations about the monetary policy rate (MPR) play a key role in the transmission to deposit and credit interest rates. This process is neither immediate nor uniform across financial products. 

The Federal Reserve's capital requirements in 2022 led to a significant contraction in short-term credit for Colombian banks, reflecting the impact of regulations in advanced economies on liquidity in emerging markets. 

ApproachThis document presents a stress testing model designed to assess, from a forward-looking perspective, the financial vulnerability of non-financial corporations in Colombia. This tool is used by the Financial Stability Department of Banco de la República (the Central Bank of Colombia) as…

AbstractWe provide the first comprehensive analysis of the flow-performance relation in Colombian open-end investment funds. We employ a rich dataset containing weekly information at the fund level, including balance sheets, portfolio holdings, liquidity indicators, capital flows, and returns, from…

Market frictions and banking regulations limit the liquidity of the derivatives market, particularly affecting large firms. Foreign exchange interventions have asymmetric effects: they implicitly protect small firms under low intervention scenarios, but benefit large firms when intervention is high.

AbstractWe present evidence of the minimum wage effects on labour informality rates in Colombia, where the informality is by far the most serious problem of the labour market. The working population is divided into sixteen groups depending on the age, gender, and educational level. This division…

Regarding the impact of monetary policy on housing prices, we find that it is significant: a one-unit monetary policy surprise shock (in the index) leads to a decline in housing price growth of approximately 6 percentage points as supply elasticity decreases.

Although there is a close relationship between the government’s budget and its fiscal balance, they respond to different objectives, concepts, accounting bases, and measurement methodologies, which makes their understanding, monitoring, and evaluation more difficult. 

Hospital productivity has declined steadily across all three complexity levels. Level 3 public hospitals (ESEs) were more resilient during the pandemic, while Level 2 hospitals suffered the greatest impact but showed a stronger recovery. Level 1 hospitals experienced the most prolonged decline with…

The implicit equity tax is progressive for smaller firms but regressive for larger ones.

AbstractWe study the financial and real effects of a wealth tax reform in Colombia that included a large share of small and medium-sized enterprises (SMEs) as new taxpayers. The tax was introduced in response to a severe weather shock that affected several regions of the country. We use a unique…

Since: 1994

This paper identifies Okun´s law in Colombia between 1984 and 2016 using a Vector Error Correction Model (VECM) as there is evidence of a long-term relationship between the unemployment rate and the GDP. Results suggest that after a one percent increase in GDP, the unemployment rate is reduced by 0…

The analysis shows how the demand for cash and checks from 1923 to 2023 was shaped by economic activity, inflation dynamics, the development of the financial system, technological innovation, and significant historical shocks such as wars, political instability, or the Covid-19 pandemic.

This paper presents a methodology to estimate the intraday liquidity that systemically important entities (SIE) need to fulfill all its obligations in a timely fashion, when a simulated failure-to-pay from its main liquidity supplier by discretionary concepts of payment occurs. Using the Bank of…

AbstractIn this paper, we study the coexistence of cash and electronic payments introducing some distortions in the payments markets to understand the widespread use of cash, specially in emerging countries. Following Lagos and Wright (2005) we model explicitly some frictions in the…

We study the network of Colombian sovereign securities settlements. With data from the settlement market infrastructure we study financial institutions’ transactions from three different trading and registering individual networks that we combine into a multi-layer network.

AbstractCash is still widely used in Colombia, even among merchants that accept payment cards. Indeed, 60% of these merchants use dissuasive strategies to make their clients pay with cash. This shows that merchant service costs (MSC) for cards are not optimal in the sense of the Tourist Test. We…

The financial soundness of Central Banks (CBs) may be a necessary condition for achieving their objectives. Banco de la República (the Central Bank of Colombia) has a legal framework that grants it administrative, equity, and technical autonomy, as well as mechanisms that help preserve its capital…