Monetary and Exchange Rate Policies in Colombia: Progress and Challenges

Author/Editor:

Sergio Clavijo

Publication Date:

September 1, 2004

Electronic Access:

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Disclaimer: This Working Paper should not be reported as representing the views of the IMF.The views expressed in this Working Paper are those of the author(s) and do not necessarily represent those of the IMF or IMF policy. Working Papers describe research in progress by the author(s) and are published to elicit comments and to further debate

Summary:

This paper focuses on monetary and exchange rate policies in Colombia, with particular emphasis on the period 1999-2002, when flotation of the peso and inflation targeting were adopted. We argue, first, in favor of adopting "operational inflation target ranges" and, second, in favor of strengthening the current scheme of foreign exchange options. The impact of reductions in the reference rates of the Central Bank of Colombia is also assessed. We find that a lower central bank policy interest rate is likely to affect demand only if mortgage refinancing takes place. We present preliminary estimates of Taylor rules in an openeconomy framework for Colombia.

Series:

Working Paper No. 2004/166

Subject:

Banking Financial services Inflation Inflation targeting Monetary aggregates Monetary policy Money Prices Real interest rates Repo rates

English

Publication Date:

September 1, 2004

ISBN/ISSN:

9781451858136/1018-5941

Stock No:

WPIEA1662004

Pages:

28

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