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Price Dynamics in the Departments of Colombia: Estimation of the Neo-Keynesian Phillips Curve

Author

Listed:
  • José Mauricio Gil-León

    (Universidad Pedagógica y Tecnológica de Colombia)

  • Juan Pablo Cely-Acero

    (Universidad Pedagógica y Tecnológica de Colombia)

Abstract

This paper explains the dynamics of inflation in the departmental departments of Colombia between 2009-2019, estimating the Neo Keynesian Phillips curve (NKPC). There are differences in the formation of inflation and evidence that the NKPC allows describing a low probability of changes in prices for departments, mainly in the central zone of the country. The estimated coefficients support the importance of expected inflation on price formation, and less importantly the role of lagged inflation (persistence of inflation). This persistence of inflation is a reflection of structural rigidities, which reduce the ability of firms in one department to modify their prices in relation to others. These differences in the processes that determine the dynamics of inflation between departments have important implications for the conduct of monetary policy in Colombia.

Suggested Citation

  • José Mauricio Gil-León & Juan Pablo Cely-Acero, 2022. "Price Dynamics in the Departments of Colombia: Estimation of the Neo-Keynesian Phillips Curve," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 97, pages 11-43, July-Dece.
    • Handle: RePEc:lde:journl:y:2022:i:97:p:11-43
    DOI: 10.17533/udea.le.n97a344963
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    References listed on IDEAS

    as
    1. Luis F. Céspedes & Marcelo Ochoa & Claudio Soto, 2005. "The New Keynesian Phillips Curve in an Emerging Market Economy: The Case of Chile," Working Papers Central Bank of Chile 355, Central Bank of Chile.
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    More about this item

    Keywords

    Neo Keynesian Phillips curve; departmental inflation; sticky prices; generalized method of moments.;
    All these keywords.

    JEL classification:

    • E31 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Price Level; Inflation; Deflation
    • E52 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Monetary Policy
    • J40 - Labor and Demographic Economics - - Particular Labor Markets - - - General
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General

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