In the past decade the Colombian Economic Authorities undertook a series of measures that reduced the structural fiscal deficit, decreased the Government currency mismatch and deepened the local fixed-rate public bond market. This paper presents some evidence suggesting that these improvements...

In this paper we explore the price setting behavior of Colombian producers and importersusing a unique database containing the monthly price reports underlying the ColombianPPI from Jun-1999 to Oct-2006. We focus on five particular questions: 1. Are pricessticky or flexible? 2. Is a price...

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...

This paper analyses the effects of sterilised, intraday foreign exchange market operations (non-discretionary and discretionary) on foreign exchange returns and volatility in four inflation targeting economies in Latin America. The distribution of exchange rates during intervention and...

We study the relationship between US and Colombian sovereign debt interest rates. We also evaluate the response of the Colombian long-term bond yield and other asset prices to shocks to the US long-term Treasury rate. Two empirical exercises are performed. First, we use a moving window linear...

In order to asses the credibility of their targets and policies, in-°ation targeting central banks always keep an eye on market expectations ofthe future in°ation rates and short maturity interest rates. In economies withdeveloped ¯nancial markets the prices of ¯nancial assets are a prime...

The assessment of inflationary pressures in Colombia has faced two important challenges inthe present decade. The …rst one occurred in 2006 and consisted of detecting an overheatingeconomy in the midst of fast growing investment and increasing measured productivity. Thesecond challenge took...