A MODEL OF THE NOMINAL AND REAL EXCHANGE RATES IN COLOMBIA

javier Gómez P. ()
Authors registered in the RePEc Author Service: Javier G. Gómez-Pineda

No 1923, Borradores de Economia from Banco de la Republica

Abstract: Using the johansens cointegration technique we develop an empirical model of the nominal and real exchange rates of Colombia. We find that the nominal exchange rate is determined by the nominal variables and the fundamentals and that the real exchange rate is determined by the fundamentals but neutral to the nominal variables. Changes in the real exchange rates take place through changes in the nominal exchange rate, thus the nominal and the real exchanges are correlated, however, the real exchange rate may not be modified by nominal exchange rate policy because, in the model, the nominal exchange rate is endogenous. We find that in the long run the nominal exchange rate of Colombia behaves as if it were flexible and the nominal anchor were money.

Keywords: Exchange rates (search for similar items in EconPapers)
Pages: 19
Date: 1999-08-31
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Citations: View citations in EconPapers (1)

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Related works:
Working Paper: A Model of the Nominal and Real Exchange Rates in Colombia (1999)
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Persistent link: https://EconPapers.repec.org/RePEc:col:000094:001923

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