Javier Gómez

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…

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…

The paper provides a model of the banking firm in the macroeconomy intended to explain what determines the interest rate spread. A key factor explaining the spread in our model is the resource cost of capital. A statistical result confirms the prediction of the model, that is, the bank's spread…

Output Gap Estimation, Estimation Uncertainty and its Effect on Policy Rules Output Gap Estimation, Estimation Uncertainty and its Effect on Policy Rules

A Model of the Nominal and Real Exchange in Colombia A Model of the Nominal and Real Exchange in Colombia   Javier Gómez*

An Estimation Of the Nonlinear Phillips Curve in Colombia An Estimation Of the Neonlinear Phillips Curve in Colombia Javier Gómez and Juan Manuel Julio  */

Transmission mechanisms and inflation targeting: the case of Colombia’s desinflation

A Statement of the Colombian Constitutional Court has mandated wage indexation on the basis of past inflation. A simple model with a wage price system, a real block, and an inflation targeting interest rule is calibrated to resemble price setting in the Colombian economy and to analyze the…

Sudden stops seem to create the perfect environment for disinflation, especially when central banks defend the exchange rate by increasing interest rates. We propose a variation of the output gap model that incorporates the sudden stop shock. The use of the model in policy analysis shows that…

We develop a small open economy model with sectorial balance sheets that are exchange rate exposed and with sectorial stock and flow consistency. The model is perturbed by a shock to investor sentiment and a sudden stop to capital inflow. It is used to evaluate the claims that usually back the…

Capital inflows and outflows often remind policymakers of the monetary policy “trilemma” and the several associated dilemmas. To tackle these dilemmas, an equilibrium model of capital flows is proposed. The model captures bouts of capital inflows and outflows with shocks to the emerging-market…

An empirical model of the pass-through of international to domestic food inflation is proposed. The inflation rates and exchange rates of China and India are found to be significant in explaining imported food inflation in Colombia, 10,000 miles away. Notwithstanding the recent increase in…

The objective of this paper is to analyze how international cycles affect the real GDP cycle and so monetary policy decisions in Colombia. We estimate that cycles in world GDP, export prices and capital inflows are strongly associated with the Colombian business cycle both on impact and even…