Capital Mobility and Monetary Policy in Colombia

International Monetary Fund

No 1988/077, IMF Working Papers from International Monetary Fund

Abstract: This paper estimates a model of financial markets in Colombia to examine: 1) the authorities’ control over domestic interest rates and the money stock; and 2) the effects of the crawling peg exchange rate policy on exchange rate expectations and domestic interest rates. The authorities appeared to possess some control over the money stock in the short run, mostly because of the existence of capital controls, but most of this control was eroded once asset demands adjust to their desired banks. The expected rate of depreciation is not closely linked to the crawling peg.

Keywords: WP; rate of depreciation; interest rate; exchange rate; rate of return; expected rate of depreciation; asset holding; Banco de la Republica; asset stock; domestic interest rate; Foreign assets; Domestic credit; Depreciation; Demand for money; International reserves (search for similar items in EconPapers)
Pages: 38
Date: 1988-01-01
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Citations: View citations in EconPapers (3)

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