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Public Debt , Publit Debt Markets And Monetary Policy In Colombia

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  • Patricia Correa

Abstract

The purpose of this paper is to examine the main macro- and microinterrelationships between public debt policy and monetary policy in Colombia during 1995-1999, from the perspective of a central banker. Emphasis will be given to the financial developments of the last two years, a period in which Colombia´s capital markets have experienced significant upheaval. Over the last decade, the public sector, as well as the private sector, have accumulated a significant stock of debt (both foreign and domestic). Between 1990 and 1999, the central government debt /GDP ratio grew 57.9%, and between 1994 and 1999, it grew 212% (Graph1). In this last period, as the result of an explicit strategy of the Ministry of Finance to develop a domestic public debt market and reduce dependency on foreign markets, the stock of domestic central government debt grew faster, showing an increase of 257% as proportion of GDP (foreign debt grew 125%). Though government debt in Colombia is still relatively low compared to that of many industrialized and developing economies ( 27 % of GDP in the case of central government and around 35% of GDP for the total public sector), there is a consensus that further accumulation of fiscal deficits is no longer sustainable.

Suggested Citation

  • Patricia Correa, 2000. "Public Debt , Publit Debt Markets And Monetary Policy In Colombia," Borradores de Economia 3406, Banco de la Republica.
  • Handle: RePEc:col:000094:003406
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    References listed on IDEAS

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    1. Benjamin M. Friedman, 1993. "The Role of Judgment and Discretion in the Conduct of Monetary Policy: Consequences of Changing Financial Markets," NBER Working Papers 4599, National Bureau of Economic Research, Inc.
    2. Randall S. Kroszner, 1998. "Global Government Securities Markets: Economics and Politics of Recent Market Microstructure Reforms," International Economic Association Series, in: Guillermo Calvo & Mervyn King (ed.), The Debt Burden and its Consequences for Monetary Policy, chapter 4, pages 86-113, Palgrave Macmillan.
    3. Rudi Dornbusch, 1998. "Debt and Monetary Policy: The Policy Issues," International Economic Association Series, in: Guillermo Calvo & Mervyn King (ed.), The Debt Burden and its Consequences for Monetary Policy, chapter 1, pages 3-27, Palgrave Macmillan.
    4. International Monetary Fund, 1994. "The Coordination of Domestic Public Debt and Monetary Management in Economies in Transition: Issues and Lessons From Experience," IMF Working Papers 1994/148, International Monetary Fund.
    5. Guillermo Calvo & Mervyn King (ed.), 1998. "The Debt Burden and its Consequences for Monetary Policy," International Economic Association Series, Palgrave Macmillan, number 978-1-349-26077-5.
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    Cited by:

    1. María Angélica Arbeláez Restrepo & Ulpiano Ayala Oramas & James Poterba, 2002. "Debt and Deficits:Colombia´s Unsustainable Fiscal Mix," Informes de Investigación 2250, Fedesarrollo.
    2. Carlos Esteban Posada & Luis Eduardo Arango, 2000. "¿Podemos sostener la deuda pública?," Borradores de Investigación 3817, Universidad del Rosario.
    3. Carlos Esteban Posada P. & Luis Eduardo Arango, 2000. "Podremos Sostener La Deuda Pública?," Borradores de Economia 3330, Banco de la Republica.

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