Working Papers on Economics

Network analysis has been applied to identify systemically important financial institutions after the 2008 financial crisis. Such applications have stressed the importance of centrality within the too-connected-to-fail concept.

In the context of financial crises influenced by the development and burst of housing price bubbles, the detection of exuberant behaviors in the financial market and the implementation of early warning diagnosis tests are of vital importance. This paper applies the new method developed by…

We assess the effects of the Colombian Unemployment Subsidy (US) program on future labor participation, unemployment, formality, school attendance and earnings of its beneficiaries, on household earnings and school attendance of the household members, and on weight and height of their children…

This paper provides empirical evidence of the impact of fiscal decentralization on Colombia's public basic education. Based on the social and economic data available for 1,003 municipalities and 13,670 public schools, for the last decade, we confirmed that decentralization has had a positive and…

In this paper I explore the potential link between Plan Colombia and violence with a new perspective. I focus the analysis only on the first three running years of the program (2000-2002) in order to avoid the overlapping effect with a security policy started in 2002/2003. This paper exploits…

This paper investigates the impact of sovereign risk on the stochastic rational expectations equilibrium of a pure exchange small open economy. International borrowing and lending arise from the interaction between a risk averse sovereign representative agent in a small open economy trying to…

Informational constraints may turn the Merton Model for corporate credit risk impractical. Applying this framework to the Colombian financial sector is limited to four stock-market-listed firms; more than a hundred banking and non-banking firms are not listed. 

As a result of the most recent global financial crisis literature has embraced size, connectedness and substitutability as key indicators for financial institutions’ systemic importance. Despite the intuitiveness of these concepts, identifying systemic important institutions remain a non-trivial…

In this document we use the Expectations Survey conducted monthly by the Central Bank of Colombia during the period of October 2003 – August 2012. We find that exchange rate revaluations were generally followed by expectations of further revaluation in the short run (1 month), but by…

This paper studies whether the geographical separation of markets constitutes a factor that helps explain the dynamics of agricultural prices. To do this, we employ a highly disaggregated dataset for Colombia that consists of weekly observations on wholesale prices for 18 agricultural products…

We apply a pair-wise approach to test the law of one price for deposit (lending) rates in Colombia. We find that when banks are of different size deposit rates adjust quickly, suggesting a competitive environment. By contrast, lending rates adjust rapidly when banks are of similar size,…

Using data from the 2010 Colombia Demographic and Health Survey and of the National Survey of the Nutritional Situation in Colombia (ENDS-ENSIN), we analyzed the evolution of the height for the Colombian birth cohorts in the period 1946-1992 by ethnic groups defined through self-classification.…

This study implements a regular vine copula methodology to evaluate the level of contagion among the exchange rates of six Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico and Peru) from June 2005 to April 2012. We measure contagion in terms of tail dependence coefficients,…

In this paper two new measures of the Colombian output gap and the real neutral interest rate are proposed. Instead of relying only on statistical filters, the proposed measures use semi-structural New-Keynesian models, adapted for a small open economy. The output gap measures presented are in…

In this paper, we propose an alternative methodology to determine the existence of credit booms, which is a complex and crucial issue for policymakers. In particular, we exploit the Mendoza and Terrones (2008)’s idea that macroeconomic aggregates other than the credit growth rate contain…

This paper presents a novel monthly dataset of job vacancies in Bogota between 1960 and 2010. The dataset was constructed by counting the number of help-wanted announcements published in the most important newspaper with national circulation—namely, El Tiempo. We describe the methodology used to…

This paper measures the impact of strengthening the security policy on the rural labour market in Colombia by exploiting the structural change in the number of rural seizures. The new policy produced dissimilar effects across gender, age-groups, and types of occupation. For adults, especially…

We analyse three models to determine the conditions under which reserve requirements are used as a part of an optimal monetary policy framework in an inflation targeting regime. In all cases the Central Bank (CB) minimizes an objective function that depends on deviations of inflation from its…

To evaluate whether transparency is beneficial, it is usual to assume that the central bank may choose one of two options, opacity versus truthful communication. However, the monetary policymaker may have incentives to misrepresent private information so as to reduce economic volatility by…