Monetary Policy Report - July de 2021 (original) (raw)
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Monetary Policy Report - October 2020
2021
Recent data suggest that the technical staff’s appraisals of the condition and development of economic activity, inflation and the labor market have been in line with current trends, marked by a decline in demand and the persistence of ample excess productive capacity. A significant projected fall in output materialized in the second quarter, contributing to a decline in inflation below the 3% target and reflected in a significant deterioration of the labor market. A slow recovery in output and employment is expected to continue for the remainder of 2020 and into next year, alongside growing inflation that should remain below the target. The Colombian economy is likely to undergo a significant recession in 2020 (GDP contraction of 7.6%), though this may be less severe than projected in the previous report (-8.5%). Output is expected to have begun a slow recovery in the second half of this year, though it is not projected to return to pre-pandemic levels in 2021 amid significant glob...
Inflationary trends in Colombia
Journal of Policy Modeling, 1993
Colombian inflation exceeded 32 percent in 1990. In response, the government announced plans to slash the inflation mte by IO points in 1991. To examine potential impacts of the anti-inflation program. the efiects of slower rates of nominal exchange rate devaluation and money supply growth are studied. Empirical analysis is carried out utilizing transfer function autoregressive-moving average (ARMA) analysis. Monthly data from 1967 forward are analyzed, corresponding to the crawling peg era of exchange rate determination in Colombia. Money and the exchange rate are found to Granger-cause the consumer price index (CPI). Model simulation indicates that adherence to the program can lead to noticeable disinflation over a 24-month period. 1. INTRODUCTION Inflation remains one of the most serious economic problems facing policymakers in Latin America. Although Colombia has traditionally enjoyed lower rates of inflation than neighboring South American countries. in 1990. a presidential election year, consumer prices rose in excess of 32 percent. In response. Colombian monetary authorities introduced a series of policy innovations designed to lower the inflation rate. Measures adopted include a progressive opening of the economy to greater volumes of international trade, fiscal austerity, tighter credit conditions, and a slower rate of currency devaluation (see Fullerton. 1991. for details). This study examines potential results associated with the principal tools of the policy adjustment effort. To directly measure the relationships among the consumer price index (CPI). the money supply (MI, defined as currency in circulation plus demand deposits), and the peso/dollar exchange rate (REX), transfer function autoregressivemoving average (ARMA) analysis is applied. Subsequent sections of the paper present a brief review of the literature, methodology. and empirical results. A policy simulation exercise covering a realistic time frame for disinflation follows. A summary is included in the final section of the paper. 2. PREVIOUS STUDIES Cabrera and Montes (1978) utilize univariate ARMA techniques to model the CPI in Colombia. Logarithmic transformation and regular and seasonal differencing of the monthly CPI series are used to induce stationarity. An equation containing air auto
Recent macroeconomic performance in Colombia: what went wrong?
Revista De Economia Del Rosario, 2006
At the end of the last decade, real activity in Colombia underwent the sharpest recession it had suffered in the last fifty years. With the aim to explain this phenomenon, we are postulating a non-triangular structural VAR model to describe the dynamics of output, prices, unemployment and wages during the last two decades. Evidence suggests that, in the long run, monetary policy has been neutral in regard to both output and unemployment while the main reasons for the increase in the latter have been the way in which wages have been determined (because of backward-formed expectations) and the increase in non-wage labour costs.
“Changes in Monetary Policy in Latin America post-pandemic (2022), the cases of Central Banks (Brazil, Chile and Mexico)” (Atena Editora), 2023
En América Latina, los Bancos Centrales de Brasil, Chile y México han adoptado medidas en su Política Monetaria para hacer frente a los altos niveles de inflación que afectan no solo a estas economías sino también al mundo en general. Estos países tienen como objetivo lograr la estabilidad de los precios, para lo cual han otorgado autonomía a sus Bancos Centrales desde la década de los 90, conocida como el periodo de la gran moderación. Si bien los países desarrollados han adoptado cambios en sus políticas monetarias después de la crisis del 2008, los países de América Latina han mantenido las mismas medidas implementadas antes de esta crisis, esperando obtener resultados positivos en sus economías. Sin embargo, en la nueva reconfiguración económica, es importante distinguir los posibles efectos que podrían surgir por las constantes altas tasas de interés que establecen los Bancos Centrales de América Latina. Es necesario analizar si estas medidas permitirán recuperar el control sobre los altos niveles inflacionarios o si se requerirá una mayor intervención por parte de la política fiscal para lograr reducir los niveles inflacionarios. En este sentido, resulta crucial evaluar los efectos de la flexibilización cuantitativa que se ha adoptado en los países desarrollados y si puede ser una alternativa para los países de América Latina.
Recent Behavior of Output, Unemployment, Wages and Prices in Colombia: What went Wrong?
Borradores de Economia, 2003
At the end of the last decade, the real activity in Colombia underwent the sharpest recession of the last fifty years. We postulate a non-triangular structural VAR model to describe the dynamics of output, prices, unemployment and wages during the last two decades. The evidence suggests that, in the long-run, monetary policy has been neutral to both output and unemployment while the main reasons for the increase in the latter have been the lack of credibility of monetary policy, the way in which wages are set and the increase in non-wage labor costs. for helpful comments and suggestions and Mario Ramos for valuable research assistance. The usual disclaimers apply.
Inflation targeting in Colombia, 2002-2012
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 inflationtargeting (IT) regime in 1999, with inflation as the nominal anchor, a floating exchange rate, and the short-term interest rate as the main instrument. We examine the experience of the Colombian Central Bank over the last decade, a period of consolidation and innovation of its IT strategy. We study 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, we estimate a small-scale open-economy-policy-model.