The Target of the Central Bank and Inflation Persistence in Colombia [La meta del Banco Central y la persistencia de la inflación en Colombia]

In this document we estimate an econometric model which describes quarterly inflation by an unobserved component trend-cycle model, where the trend is probably induced by the target of the Central Bank. It shows that inflation persistencerose in Colombia between 1979-1989 and 1989-1999, and decreased to its lowest level in 1999-2010, thanks to the adoption of inflation targeting. The inflation gap shows low persistence, a result compatible with the Neo-Keynesian Phillips curve. The final part of the document evaluates inflation persistence for the different components of inflation used by the Central Bank to project inflation.

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