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 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...

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...

The Colombian economy and financial system have coped reasonably well with the effects of the global financial crisis. Hence, "unconventional" policy measures have not been at the center of the policy decisions and discussions. Nominal short term interest rates have remained the main monetary...

Tradicionalmente los requerimientos de encaje han sido vistos como un instrumento clave de la política monetaria, sin embargo, recientemente éstos han sido menos esenciales dado que el crecimiento de los agregados monetarios ha dejado de ser el objetivo de política de muchos países. A pesar...

The purpose of this paper is to analize the links between central bank independence and foreign exchange policies, in the light of the recent experience of the major Latin American countries. To that end, the paper stars with a brief review of the literature on the subject. The second section on...

Banks and other credit institutions are key players in the transmission of monetary policy, especially in emerging market economies, where the responses of deposit and loan interest rates to shifts in policy rates are among the most important channels. This pass-through depends on the conditions...

This paper analyzes the evolution and impact of capital flows in Colombia over the past five years. An examination of the nature and composition of the capital flows indicates that to large extent they have originated in foreign direct investment, especially in the oil and mining sectors. The...

The role of the exchange rate and the exchange rate regime in the monetary policy decision-making process in Colombia is described. The rationale for the intervention of the Central Bank in the FX market is explained and the experience in this regard is reviewed. Special attention is given to...