Current account equilibrium exchange rate in Colombia (2000-2020)

Gonzalo Hernandez Jimenez

Brazilian Journal of Political Economy, 2022, vol. 42, issue 4, 902-913

Abstract: Using estimations by Bresser-Pereira et al. (2021), this paper analyses themisalignment between the real exchange rate and the current account equilibriumexchange rate in Colombia in the last two decades (2000-2020). Evidence suggests that thecommodity boom and bust cycle in this period is important to explain (i) the main trendof the misalignment, (ii) the deterioration of the current account in recent years and (iii)the general macroeconomic performance of the Colombian economy. A discussion aboutmacroeconomic development and stability is also provided in the context of the Colombianfinancial configuration, characterized by a flexible exchange rate regime, central bankindependence and inflation targeting. Ideas in this paper are consistent with key elements inthe New Developmentalism Theory. JEL Classification: E44; E61; F41.

Keywords: Exchange rate; current account; Colombia; developing economies; terms of trade (search for similar items in EconPapers)
Date: 2022
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