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Financial Frictions and Optimal Monetary Policy in a Small Open Economy
Bejarano, Jesús A.; Charry, Luisa F. - BANCO DE LA REPÚBLICA - 2014
In this paper we set up a small open economy model with financial frictions, following Curdia and Woodford (2010)’s model. Unlike other results in the literature such as Curdia and Woodford (2010), McCulley and Ramin (2008) and Taylor (2008), we find that optimal monetary policy should not...
Persistent link: https://www.econbiz.de/10010961645
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Inflation Targeting in Colombia, 2002-2012
Hamann, Franz; Hofstetter, Marc; Urrutia, Miguel - BANCO DE LA REPÚBLICA - 2014
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...
Persistent link: https://www.econbiz.de/10010828188
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The Use of Reserve Requirements in an Optimal Monetary Policy Framework
Herrera, Hernando Vargas; Cardozo, Pamela - BANCO DE LA REPÚBLICA - 2012
We analyse three models to determine the conditions under which reserve requirements are used as a part of an optimal monetary policy framework in an inflation targeting regime. In all cases the Central Bank (CB) minimizes an objective function that depends on deviations of inflation from its...
Persistent link: https://www.econbiz.de/10010763673
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Transparency: can central banks commit to truthful communication?
Parra-Polania, Julian A. - BANCO DE LA REPÚBLICA - 2012
To evaluate whether transparency is beneficial, it is usual to assume that the central bank may choose one of two options, opacity versus truthful communication. However, the monetary policymaker may have incentives to misrepresent private information so as to reduce economic volatility by...
Persistent link: https://www.econbiz.de/10010763688
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A Survey on the Effects of Sterilized Foreign Exchange Intervention
Villamizar-Villegas, Mauricio; Perez-Reyna, David - BANCO DE LA REPÚBLICA - 2015
In this paper we survey prominent theories that have shaped the literature on sterilized foreign exchange interventions. We identify three main strands of literature: 1) that which advocates the use of sterilized interventions; 2) that which deems sterilized interventions futile; and 3) that...
Persistent link: https://www.econbiz.de/10011123063
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The Impact of Pre-announced Day-to-day Interventions on the Colombian Exchange Rate
Echavarría, Juan José; Velandia, Luis Fernando Melo; … - BANCO DE LA REPÚBLICA - 2013
The adoption of a managed regime assumes that interventions are relatively successful. However, while some authors consider that foreign exchange interventions are ineffective, arguing that domestic and foreign assets are close substitutes, others advocate their use and maintain that their...
Persistent link: https://www.econbiz.de/10010828154
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El uso de encajes en un marco de política monetaria óptima?
Vargas, Hernando; Cardozo, Pamela - BANCO DE LA REPÚBLICA - 2012
Se analizan tres tipos de modelos para determinar cuándo, bajo un esquema de inflación objetivo, el Banco Central (BC) debe utilizar los encajes como una herramienta de política monetaria óptima. En todos los casos el BC busca minimizar una función objetivo que consta de las desviaciones de...
Persistent link: https://www.econbiz.de/10010763642
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Price-Level Targeting: an omelette that requires breaking some Inflation-Targeting eggs?
Parra-Polania, Julian A.; Acuña-Roa, Luisa F. - BANCO DE LA REPÚBLICA - 2013
This manuscript can be divided into two main parts. The first one, using a simple example by Minford (2004) and Hatcher (2011), gives the reader a basic introduction to understand the comparison between two monetary-policy regimes: Inflation Targeting (IT) and Price-Level Targeting (PLT). The...
Persistent link: https://www.econbiz.de/10010763682
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The Impact of Different Types of Foreign Exchange Intervention: An Event Study Approach
Echavarría, Juan José; Velandia, Luis Fernando Melo; … - BANCO DE LA REPÚBLICA - 2013
To date, there is still great controversy as to which exchange rate model should be used or which monetary channel should be considered, when measuring the effects of monetary policy. Since most of the literature relies on structural models to address identification problems, the validity of...
Persistent link: https://www.econbiz.de/10010763689
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Changes in GDP’s measurement error volatility and response of the monetary policy rate: two approaches
Parra-Polania, Julian A.; Vargas, Carmiña O. - BANCO DE LA REPÚBLICA - 2014
shock signal and to changes in the measurement error volatility from two different perspectives: the minimization of the … more aggressively to the shock signal than the standard one and 2. while the standard policymaker always mitigates her … policymaker is less aggressive than the standard one in responding to the shock signal. …
Persistent link: https://www.econbiz.de/10010764997