Work

Money, the Rate of Devaluation, and Interest Rates in a Semiopen Economy: Colombia, 1968-82

Year: 1985

Type: article

Abstract: In this paper an empirical model for analyzing the behavior of nominal interest rates in a semi-open economy is developed. The model explicitly incorporates both the role of open economy factors (i.e., world interest rates, expected rate of devaluation) and domestic monetary conditions in explaining interest rates movement. The model is tested using quarterly data for Colombia for 1968-1982. The results obtained indicate that the semi-open characterization is adequate for the case of Colombia, and that world interest rates, the rate of devaluation and domestic monetary conditions have affected domestic nominal interest rates during the period under consideration. The results also indicate that unanticipated increases in the nominal quantity of money have exercised a negative effect on nominal interest rates in Colombia.

Source: Journal of money credit and banking

DOI: 10.2307/1992506

Author: Sebastian Edwards

Institutions: National Bureau of Economic Research, University of California, Los Angeles

Language: English

Topic: Monetary Policy and Economic Impact

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

Open Access status: green

OpenAlex ID: W1579894023

FWCI: 4.777

Cites:

Cited by: 28

Related to: 10