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

Author

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  • Gonzalo Hernández

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.

Suggested Citation

  • Gonzalo Hernández, 2022. "Current account equilibrium exchange rate in Colombia (2000-2020)," Brazilian Journal of Political Economy, Center of Political Economy, vol. 42(4), pages 902-913.
    • Handle: RePEc:ekm:repojs:v:42:y:2022:i:4:p:902-913:id:2370
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    More about this item

    Keywords

    Exchange rate; current account; Colombia; developing economies; terms of trade;
    All these keywords.

    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • F41 - International Economics - - Macroeconomic Aspects of International Trade and Finance - - - Open Economy Macroeconomics

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