Modelling official and parallel exchange rates in Colombia under alternative regimes: a non-linear approach

Costas Milas and Jesus Otero ()

BORRADORES DE INVESTIGACIÓN from UNIVERSIDAD DEL ROSARIO - FACULTAD DE ECONOMÍA

Abstract: We examine the long-run relationship between the parallel and the official exchange rate in Colombia over two regimes; a crawling peg period and a more flexible crawling band one. The short-run adjustment process of the parallel rate is examined both in a linear and a non-linear context. We find that the change from the crawling peg to the crawling band regime did not affect the long-run relationship between the official and parallel exchange rates, but altered the short-run dynamics. Non-linear adjustment seems appropriate for the first period, mainly due to strict foreign controls that cause distortions in the transition back to equilibrium once disequilibrium occurs.

Date: 2000-02-01
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Related works:
Working Paper: Modelling Official And Parallel Exchange Rates In Colombia Under Alternative Regimes: A Non-Linear Approach (2001)
Journal Article: Modelling official and parallel exchange rates in Colombia under alternative regimes: a non-linear approach (2003)
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Persistent link: http://EconPapers.repec.org/RePEc:col:000091:003231

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