Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/141884
Authors: 
Caporale, Guglielmo Maria
Costamagna, Rodrigo
Rossini, Gustavo
Year of Publication: 
2016
Series/Report no.: 
CESifo Working Paper 5907
Abstract: 
This paper investigates whether there is an S-Curve in Colombia using bilateral and disaggregated quarterly data for the period 1991-2014. More precisely, the short-run effects of a depreciation on the TB are analysed in 27 industries covered by the PAG Free Trade Agreement. The S-Curve found in sectors representing 30% of total industrial production suggests that in these cases competitive devaluations have a positive effect on the TB in the short run. However, the regression analysis using both OLS and FE methods shows that sizable ones are needed to produce the desired effects on trade flows. Our findings have important policy implications: since only large competitive devaluations can restore TB equilibrium, industrial restructuring would appear to be a more sensible strategy, though this cannot be achieved in the short run and is instead a medium/long-term goal.
Subjects: 
devaluations
trade balance
S-Curve
PAG Free Trade Agreement
JEL: 
F10
F40
O10
Document Type: 
Working Paper

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