The paper finds that simple econometric specifications yield surprising rich and complex dynamics -- relative prices respond to the nominal exchange rate and pass-through effects, import and export volumes respond to relative price changes, and the trade balance responds to changes in import and...

Developing countries fortunate enough to experience capital inflows haveseen rising levels of investment and enhanced economic growth. Capitalinflows have a negative side, however, in that they tend to appreciatethe domestic currency, making exports less competitive, and to encourageinflation....

This paper estimates a model of financial markets in Colombia to examine: 1) the authorities’ control over domestic interest rates and the money stock; and 2) the effects of the crawling peg exchange rate policy on exchange rate expectations and domestic interest rates. The authorities...