Estimation of the real exchange rate equilibrium: Application to Colombia

Authors

  • Jaime Silva Gonzalez Universidad del Norte

Keywords:

Real exchange rate, Colombia, equilibrium

Abstract

The aim of this study is to gather empirical evidence to discern the impact of real exchange rate on the Colombian economy during 1990 to 2002. The problem when you try to find this impact is the estimation of the real exchange rate of equilibrium, the one that is consistent whit the simultaneous acquisition of external and internal balance. In this regard to achieve this goal are we used the approach developed by Edwards (1988). This model indentifies a set of key exogenous variables that determinate those equilibriums. From this we develop a reduced model for Colombia that relates the real exchange rate with some of the variables proposed in the model. Finally we find that the real exchange rate appreciates with positive shocks to real interest rates and depreciates with the high debt service, volatile term of trade and with the variable of gross capital formation.

Author Biography

Jaime Silva Gonzalez, Universidad del Norte

Profesor investigador del Instituto de Estudios Económicos del Caribe y
miembro del Grupo de Investigación en Análisis Económico (GRANECO),
Universidad del Norte, Barranquilla (Colombia).En homenaje a la memoria del profesor Jaime Silva González, la Revista
de Economía del Caribe publica este artículo, uno de los últimos trabajos
académicos realizados por este colega y amigo.

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Published

2022-03-25

Issue

No. 4: JUL-DEC 2009

Section

Science article

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