INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*

An optimal monetary policy Taylor rule is developed for an open economy, which we then estimate following a Markov regime-switching model for quarterly data from Colombia during 1990-2011. We find two opposite monetary regimes characterized by different policy rules: until October 2000 the Central B...

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Autores principales:	VILLA,EDGAR, MISAS,MARTHA A, GIRALDO,ANDRÉS F
Lenguaje:	English
Publicado:	Pontificia Universidad Católica de Chile. Instituto de Economía. 2014
Materias:	Optimal Taylor rule inflation targeting Taylor principle Markov switching
Acceso en línea:	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0719-04332014000100002
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spelling	oai:scielo:S0719-043320140001000022014-07-07INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*VILLA,EDGARMISAS,MARTHA AGIRALDO,ANDRÉS F Optimal Taylor rule inflation targeting Taylor principle Markov switching An optimal monetary policy Taylor rule is developed for an open economy, which we then estimate following a Markov regime-switching model for quarterly data from Colombia during 1990-2011. We find two opposite monetary regimes characterized by different policy rules: until October 2000 the Central Bank of Colombia reacted only statistically to output gap changes while after October 2000, when inflation targeting was officially adopted, monetary policy reacted only statistically to changes in the inflation rate. The latter regime is consistent with the Taylor principle as shown analytically and verified empirically by a unit root test for a Markov regime-switching model.info:eu-repo/semantics/openAccessPontificia Universidad Católica de Chile. Instituto de Economía.Latin american journal of economics v.51 n.1 20142014-05-01text/htmlhttp://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0719-04332014000100002en10.7764/LAJE.51.1.41
institution	Scielo Chile
collection	Scielo Chile
language	English
topic	Optimal Taylor rule inflation targeting Taylor principle Markov switching
spellingShingle	Optimal Taylor rule inflation targeting Taylor principle Markov switching VILLA,EDGAR MISAS,MARTHA A GIRALDO,ANDRÉS F INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*
description	An optimal monetary policy Taylor rule is developed for an open economy, which we then estimate following a Markov regime-switching model for quarterly data from Colombia during 1990-2011. We find two opposite monetary regimes characterized by different policy rules: until October 2000 the Central Bank of Colombia reacted only statistically to output gap changes while after October 2000, when inflation targeting was officially adopted, monetary policy reacted only statistically to changes in the inflation rate. The latter regime is consistent with the Taylor principle as shown analytically and verified empirically by a unit root test for a Markov regime-switching model.
author	VILLA,EDGAR MISAS,MARTHA A GIRALDO,ANDRÉS F
author_facet	VILLA,EDGAR MISAS,MARTHA A GIRALDO,ANDRÉS F
author_sort	VILLA,EDGAR
title	INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*
title_short	INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*
title_full	INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*
title_fullStr	INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*
title_full_unstemmed	INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*
title_sort	inflation targeting and an optimal taylor rule for an open economy: evidence for colombia 1990-2011*
publisher	Pontificia Universidad Católica de Chile. Instituto de Economía.
publishDate	2014
url	http://www.scielo.cl/scielo.php?script=sci_arttext&pid=S0719-04332014000100002
work_keys_str_mv	AT villaedgar inflationtargetingandanoptimaltaylorruleforanopeneconomyevidenceforcolombia19902011 AT misasmarthaa inflationtargetingandanoptimaltaylorruleforanopeneconomyevidenceforcolombia19902011 AT giraldoandresf inflationtargetingandanoptimaltaylorruleforanopeneconomyevidenceforcolombia19902011
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INFLATION TARGETING AND AN OPTIMAL TAYLOR RULE FOR AN OPEN ECONOMY: EVIDENCE FOR COLOMBIA 1990-2011*

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