The implementation of inflation targeting in Colombia

Explicit inflation targets have existed in Colombia since the early nineties1 . The Colombian authorities announced a quantitative in‡ation target for the first time in 1991. The announcement was made by the Minister of Finance, at a time when there was no clear distinction between the tasks of the...

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Autores Principales: Gómez-Pineda, Javier G., Uribe, José Darío, Vargas-Herrera, Hernando
Formato: Documento de trabajo (Working Paper)
Lenguaje:Español (Spanish)
Publicado: Banco de la República 2002
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Acceso en línea:http://repositorio.banrep.gov.co/handle/20.500.12134/5220
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spelling oai:RI-BanRep:20.500.12134-52202019-04-16T16:10:24Z The implementation of inflation targeting in Colombia Gómez-Pineda, Javier G. Uribe, José Darío Vargas-Herrera, Hernando E50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General E37 - Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Application E17 - General Aggregative Models: Forecasting and Simulation: Models and Application E58 - Central Banks and Their Policies Inflation Targeting Inflación -- Colombia E50 - Política monetaria, bancos centrales, oferta de dinero y crédito: Generalidades E17 - Modelos agregados generales: Predicción y simulación; Modelos y aplicación E37 - Precios, fluctuaciones y ciclos económicos: Predicción y simulación; Modelos y aplicación E58 - Bancos centrales y sus políticas Explicit inflation targets have existed in Colombia since the early nineties1 . The Colombian authorities announced a quantitative in‡ation target for the first time in 1991. The announcement was made by the Minister of Finance, at a time when there was no clear distinction between the tasks of the central bank and those of the government with respect to macroeconomic management, nor there was any autonomy in the design and execution of monetary policy. In 1991, a new Constitution assigned the design and conduct of monetary, exchange, and credit policies exclusively to the Board of Directors of Banco de la República and made the central bank independent from the central government. According to the Constitution, ”The State, through Banco de la República must preserve the purchasing power of currency”. In addition to the constitutional mandate, in 1992 the Central Bank Law stated that the Board of Directors must announce each year a quantitative inflation target. The reduction of inflation in Colombia has faced several hurdles. To begin, the introduction of explicit inflation targets in Colombia had two special features. First, unlike other countries, the inflation target was not initially announced as part of a policy framework to achieve price stability. Second, there was a marked deviation between observed inflation and the first announced target. Thus, inflation targeting in Colombia started with low credibility and confusion about its nature and operational meaning. 2002-03-18 2002-03-18 Working Paper Documentos de trabajo Published Version http://repositorio.banrep.gov.co/handle/20.500.12134/5220 http://hdl.handle.net/20.500.12134/5220 spa Documentos de Trabajo Borradores de Economía Borradores de Economía; No. 202 https://ideas.repec.org/p/bdr/borrec/202.html https://ideas.repec.org/p/col/000094/003603.html Open Access https://creativecommons.org/licenses/by-nc-sa/4.0/ Acceso abierto Atribucion-NoComercial-CompartirIgual CC BY-NC-SA 4.0 Las opiniones contenidas en el presente documento son responsabilidad exclusiva de los autores y no comprometen al Banco de la República ni a su Junta Directiva. PDF application/pdf image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg image/jpeg Bogotá Banco de la República
institution Repositorio Institucional del Banco de la República de Colombia
collection DSpace
language Español (Spanish)
topic E50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E37 - Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Application
E17 - General Aggregative Models: Forecasting and Simulation: Models and Application
E58 - Central Banks and Their Policies
Inflation
Targeting
Inflación -- Colombia
E50 - Política monetaria, bancos centrales, oferta de dinero y crédito: Generalidades
E17 - Modelos agregados generales: Predicción y simulación; Modelos y aplicación
E37 - Precios, fluctuaciones y ciclos económicos: Predicción y simulación; Modelos y aplicación
E58 - Bancos centrales y sus políticas
spellingShingle E50 - Monetary Policy, Central Banking, and the Supply of Money and Credit: General
E37 - Prices, Business Fluctuations, and Cycles: Forecasting and Simulation: Models and Application
E17 - General Aggregative Models: Forecasting and Simulation: Models and Application
E58 - Central Banks and Their Policies
Inflation
Targeting
Inflación -- Colombia
E50 - Política monetaria, bancos centrales, oferta de dinero y crédito: Generalidades
E17 - Modelos agregados generales: Predicción y simulación; Modelos y aplicación
E37 - Precios, fluctuaciones y ciclos económicos: Predicción y simulación; Modelos y aplicación
E58 - Bancos centrales y sus políticas
Gómez-Pineda, Javier G.
Uribe, José Darío
Vargas-Herrera, Hernando
The implementation of inflation targeting in Colombia
description Explicit inflation targets have existed in Colombia since the early nineties1 . The Colombian authorities announced a quantitative in‡ation target for the first time in 1991. The announcement was made by the Minister of Finance, at a time when there was no clear distinction between the tasks of the central bank and those of the government with respect to macroeconomic management, nor there was any autonomy in the design and execution of monetary policy. In 1991, a new Constitution assigned the design and conduct of monetary, exchange, and credit policies exclusively to the Board of Directors of Banco de la República and made the central bank independent from the central government. According to the Constitution, ”The State, through Banco de la República must preserve the purchasing power of currency”. In addition to the constitutional mandate, in 1992 the Central Bank Law stated that the Board of Directors must announce each year a quantitative inflation target. The reduction of inflation in Colombia has faced several hurdles. To begin, the introduction of explicit inflation targets in Colombia had two special features. First, unlike other countries, the inflation target was not initially announced as part of a policy framework to achieve price stability. Second, there was a marked deviation between observed inflation and the first announced target. Thus, inflation targeting in Colombia started with low credibility and confusion about its nature and operational meaning.
format Documento de trabajo (Working Paper)
author Gómez-Pineda, Javier G.
Uribe, José Darío
Vargas-Herrera, Hernando
author_facet Gómez-Pineda, Javier G.
Uribe, José Darío
Vargas-Herrera, Hernando
author_sort Gómez-Pineda, Javier G.
title The implementation of inflation targeting in Colombia
title_short The implementation of inflation targeting in Colombia
title_full The implementation of inflation targeting in Colombia
title_fullStr The implementation of inflation targeting in Colombia
title_full_unstemmed The implementation of inflation targeting in Colombia
title_sort implementation of inflation targeting in colombia
publisher Banco de la República
publishDate 2002
url http://repositorio.banrep.gov.co/handle/20.500.12134/5220
_version_ 1637304737121435648
score 10,756114