Does the price puzzle exist in colombia? Empirical evidence and policy implications

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dc.contributor.authorSolomon, Blen
dc.contributor.authorRuiz, Isabel
dc.coverage.spatialMedellín de: Lat: 06 15 00 N degrees minutes Lat: 6.2500 decimal degrees Long: 075 36 00 W degrees minutes Long: -75.6000 decimal degreeseng
dc.creator.emailblen.solomon@wmich.eduspa
dc.date.accessioned2013-06-29T00:18:59Z
dc.date.available2013-06-29T00:18:59Z
dc.date.issued2006-02-22
dc.description.abstractThe positive response of prices to an increase in interest rates or contractionary monetary policy has been documented by several empirical studies.2 According to monetarist as well as IS-LM models, an increase in interest rates or contractionary monetary policy reduces aggregate demand leading to a decrease in the Price level. As a result, this positive response of prices to positive interest rate shocks is perplexing and is referred to as the price puzzle. Sims (1992) set out to examine existing theory and evidence on the effects of monetary policy by using VAR methodology. He observed a positive response of the price level to contractionary monetary policy shocks, which was positive for many quarters. Sims speculated that the information set available to policy makers might include variables that are useful in forecasting future inflation that the econometrician has not yet considered. He believed the world commodity price to be one of these information variables and therefore proposed the inclusion of the commodity price to alleviate this problem. Consequently, he found that, when the VAR is extended to include a commodity price index, the puzzle almost disappears for the USeng
dc.identifier.urihttp://hdl.handle.net/10784/937
dc.language.isoengeng
dc.publisherUniversidad EAFITspa
dc.publisher.departmentEscuela de Economía y Finanzasspa
dc.rights.accessrightsinfo:eu-repo/semantics/openAccesseng
dc.rights.localAcceso abiertospa
dc.subject.keywordPrice Puzzleeng
dc.subject.keywordVector Error Correction Modeleng
dc.titleDoes the price puzzle exist in colombia? Empirical evidence and policy implicationseng
dc.typeworkingPapereng
dc.typeinfo:eu-repo/semantics/workingPapereng
dc.type.hasVersiondrafteng
dc.type.localDocumento de trabajo de investigaciónspa

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