Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/115457
Authors: 
Urrutia, Miguel
Hofstetter Gascón, Marcel
Hamann S., Franz A.
Year of Publication: 
2014
Series/Report no.: 
IDB Working Paper Series IDB-WP-487
Abstract: 
After decades using monetary aggregates as the main instrument of monetary policy and having different varieties of crawling peg exchange rate regimes, Colombia adopted a full-fledged inflation-targeting (IT) regime in 1999, with inflation as the nominal anchor, a floating exchange rate, and the short-term interest rate as the main instrument. This paper examines the experience of the Colombian Central Bank over the last decade, a period of consolidation and innovation of its IT strategy. The paper studies the increasing number of instruments used by the CB, including systematic foreign exchange interventions, announcements, and, sporadically, macro-prudential policies, capital controls, and changes in reserve requirements, among others. The study also examines some political economy dimensions that help explain the behavior of the CB during this period. To guide the discussion, a small-scale open-economy policy model is estimated.
Subjects: 
Inflation targeting
Monetary policy
Exchange rate
Taylor rule
Colombia
JEL: 
E02
E32
E42
E43
E52
E58
E61
F31
F33
F42
Persistent Identifier of the first edition: 
Document Type: 
Working Paper

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