The international cycle and Colombian monetary policy

  title={The international cycle and Colombian monetary policy},
  author={Lavan Mahadeva and Mar{\'i}a Paola Figueroa},
The objective of this paper is to analyze how international cycles affect the real GDPcycle and so monetary policy decisions in Colombia. We estimate that cycles in worldGDP, export prices and capital inflows are strongly associated with the Colombianbusiness cycle both on impact and even during the first year. We find evidence that,because of inefficiencies in the domestic financial sector, external gains are channelledinto nontradable spending through credit expansions. This creates large… CONTINUE READING