Inflation Targeting in Colombia, 2002-2012

Miguel Urrutia (), Franz Hamann and Marc Hofstetter

No IDB-WP-487, Research Department Publications from Inter-American Development Bank, Research Department

Abstract: 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 short-term interest rate as the main instrument. This paper examines the experience of the Colombian Central Bank over the last decade, a period of consolidation and innovation of its IT strategy. The paper studies 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, a small-scale open-economy policy model is estimated.

JEL-codes: E02 E32 E42 E43 E52 E58 E61 F31 F33 F42 (search for similar items in EconPapers)
Date: 2014-02
New Economics Papers: this item is included in nep-cba, nep-lam, nep-mac and nep-mon
References: Add references at CitEc
Citations: View citations in EconPapers (8)

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Related works:
Working Paper: Inflation Targeting in Colombia, 2002-2012 (2014)
Working Paper: Inflation Targeting in Colombia, 2002-2012 (2014)
Working Paper: Inflation Targeting in Colombia, 2002-2012 (2014)
Working Paper: Inflation Targeting in Colombia, 2002-2012 (2014)
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