Publications

For central banks that have adopted an inflation targeting strategy, measuring and understanding inflation expectations are important tasks when designing monetary policy, because they influence the dynamics of price increases in a number of ways.

The macroeconomic consequences of the recent plunge in international oil prices pose a challenge to an inflation targeting strategy in small, open economies that export this commodity.

The Colombian peso depreciated 39.4% against the dollar between July 2014 and March 2015. During that period, the exchange rate rose from a monthly average value of COP 1,858 per dollar to COP 2,591.

The consolidated public sector (SPC by its acronym in Spanish) closed out 2014 with a deficit equal to 1.8% of GDP. However, the target was 1.6% of GDP, according to the Medium Term Fiscal Framework (MFMP by its acronym in Spanish) for that year.

Colombian industry has stagnated in the last four years, compared to the relatively favorable performance of the country’s economy as a whole.

The literature on the inflation targeting strategy1 highlights four channels for monetary policy pass-through: inflation expectations, the exchange rate, aggregate demand and credit. It is through these channels that changes in the central bank’s benchmark rate manage to…

In this study we construct volatility spillover indexes for some of the major stock market indexes in the world. We use a DCC-GARCH framework for modelling the multivariate relationships of volatility among markets. Extending the framework of Diebold and Yilmaz [2012] we compute spillover…

We study the interdependence between real commodity prices and world real GDP using long-term annual data since 1870, by performing two empirical exercises. First, we compute long-term and medium-term cycles and measure their degree of synchronization for different leads and lags. Second, we…

This paper assesses the efficiency of crop and livestock production in Colombia by using a sample of 1,565 households. The study considers households located in different production systems which differ in geography, climate and soil types. These conditions affect technical efficiency and thus…

For a small open economy that receives external funding and is obliged to adapt to international credit and liquidity conditions, besides being an intensive producer and exporter of commodities (as is the case of Colombia and many other countries in the region), it is…

Fluctuations in commodity prices are an important driver of business cycles in small emerging market economies (EMEs). We document how these fluctuations correlate strongly with the business cycle in EMEs. We then embed a commodity sector into a multi-country EMEs business cycle model where…

Through its benchmark interest rate, Banco de la República is able to influence the behavior of the Colombian economy, and that of variables such as inflation, GDP growth, among others. A significant portion of the impact of monetary policy depends on the distance between the…

Macroprudential tools have been used around the world as a mechanism to control potential risks and imbalances in the financial sector. Colombia is a good example of a country that has employed different regulatory measures to manage systemic risks in the economy. The purpose of this paper is to…

This paper estimates the local efficiency of the public provision of education in Colombia between 2007 and 2014. The empirical analysis relies on a multiproduct function that assesses public performance considering two types of education products: quality and enrolment. Results for Colombian…

Fiscal multipliers are different across countries and according with economic circumstances. The studies about the effect of a government spending shock on output have focus their attention on the behavior of consumption. However, the crowding out of investment is also an important matter of…

One way to explain the rise in inflation from 2.89% in July 2014 to 8.60% in June 2016 is to analyze the contribution from each component of the CPI. This period was selected because it was when the peso began to depreciate sharply against the dollar.

Consumer prices in Colombia trended upward in the past two years. This section is an attempt to show to what extent this performance is explained by the price hikes in the border cities of Cucuta and Pasto. The annual price increases in those cities have exceeded the …

Abrupt and sudden movements in the exchange rate are a cause for concern among monetary authorities, because they can jeopardize compliance with the inflation target as a result of higher import and other prices in the economy, and given their impact on inflation …

Recent developments in inflation in Colombia (defined as the change in the consumer price index: CPI) were influenced by the simultaneous presence of two different shocks. On the one hand, there is a group of widespread and lasting shocks that affect a large number of…