Monetary Policy and Accumulation of Reserves in an Emerging Economy: A dsge Model for the Colombian Case

Jesús Botero G (), Álvaro Hurtado Rendón (), Humberto Franco G. () and José García Guzmán ()

Revista de Economía del Rosario, 2018, vol. 21, issue 2, No 17972, 309-339

Abstract: This article presents a dynamic stochastic general equilibrium model in which we explicitly include the demand for money, the investment decisions, the role of financial intermediaries and the central bank balance sheet. The model allows the evaluation of the impact of various exogenous shocks on the economic activity and the price levels. Similarly, it allows to assess different forms of central bank intervention in the economy, either through the interest rate, or through the accumulation of international reserves. Special attention is dedicated to the basic parameters of the utility function of households (risk aversion, elasticity of labor supply and demand for money), to the proper formulation of the balance sheets of economic agents, and to the relationship between the central bank balance sheet and the money supply.

Keywords: DSGE; monetary policy; fiscal policy; economic theory (search for similar items in EconPapers)
JEL-codes: E17 E37 E44 E62 (search for similar items in EconPapers)
Date: 2018
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Persistent link: https://EconPapers.repec.org/RePEc:col:000151:017972

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