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dc.creatorGalindo, Arturo José
dc.date.created1998-09-12
dc.date.issued1998-09-12
dc.identifier.urihttp://repositorio.banrep.gov.co/handle/20.500.12134/5121
dc.description.abstractThis paper analyzes credibility in the Colombian exchange rate target zone. A model of imperfect credibility, in the spirit of Bertola and Svensson (1993) is derived, and is used to explain why the exchange rate in Colombia has remained for prolonged periods neathe borders of the zone. The main feature of the model is that central parity depreciation expectations are endogenous with respect to the position of the exchange rate inside the target zone. The Krugman (1991) perfectly credible setup turns out to be a particular case of this general model. One of the main impliations of the model is that depreciation expectations increase rather than decrease as the exchange rate approaches the upper band. Hence a model as the one presented in this paper, is useful to explain the recent dynamics of interest rates in Colombia. It is also shown, that this model shares empirical feactures with the basic target zone model. Hence, policy makers might be misled when trying to recognize their credibility stance. A structural estimation of the underlying parameters of the model, using McFadden's (1989) method of simulated moments, is suggestedto identify the presence of non credibility issues. Econometric evidence suggest that Colombia's exchange rate
dc.format.mimetypePDF
dc.language.isospa
dc.publisherBanco de la República
dc.relation.ispartofDocumentos de Trabajo
dc.relation.ispartofseriesBorradores de Economía
dc.relation.isversionofBorradores de Economía; No. 103
dc.rights.accessRightsOpen Access
dc.rights.urihttps://creativecommons.org/licenses/by-nc-sa/4.0/
dc.titleEstimating credibility in Colombia's exchange rate target zone
dc.typeWorking Paper
dc.subject.jelE52 - Monetary Policy
dc.subject.jelE31 - Price Level; Inflation; Deflation
dc.subject.keywordEstimating
dc.subject.keywordCredibility
dc.subject.keywordColombia
dc.subject.lembCambio exterior -- Colombia
dc.subject.lembBandas cambiarias -- Colombia
dc.subject.lembTasas de interés -- Colombia
dc.type.spaDocumentos de trabajo
dc.rights.spaAcceso abierto
dc.rights.ccAtribucion-NoComercial-CompartirIgual CC BY-NC-SA 4.0
dc.subject.jelspaE31 - Nivel de precios; Inflación; Deflación
dc.subject.jelspaE52 - Política monetaria
dc.type.hasversionPublished Version
dc.coverage.sucursalBogotá
dc.rights.disclaimerLas opiniones contenidas en el presente documento son responsabilidad exclusiva de los autores y no comprometen al Banco de la República ni a su Junta Directiva.
dc.relation.repechttps://ideas.repec.org/p/bdr/borrec/103.html
dc.relation.dotechttps://ideas.repec.org/p/col/000094/002604.html
dc.identifier.handlehttp://hdl.handle.net/20.500.12134/5121


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This work is licensed under a Creative Commons Reconocimiento-NoComercial 4.0.This document has been deposited by the author (s) under the following certificate of deposit