Budget Deficit, Money Growth and Inflation: Evidence from the Colombian Case

Publicado en

• Money Affairs

Resumen

• Evidence of the causal long-term relationship between budget deficit, money growth and inflation in Colombia is analyzed in this paper, considering the standard (M1), the narrowest (M0-Base) and the broadest (M3) definitions of money supply. Using a vector error correction (VEC) model with quarterly data over the last 25 years, the study found a close relationship between inflation and money growth on the one hand, and between money growth and fiscal deficit, on the other. The size of the long-term parameters looks acceptable, particularly when compared to what is seen in other countries, using analogous or different techniques. The conclusion, supported by several statistical tests, is that the Sargent and Wallace hypothesis would be the most appropriate approach to understanding the dynamics of these variables.

autores

• Lozano-Espitia, Ignacio

fecha de publicación

• 2009

Enfoque geográfico

• Colombia  Country
• South America  Continent

Página inicial

• 65

Última página

• 95

Volumen

• 22

Issue

• 1