The Exchange Rate and its Impacts on Colombian Economic Aggregates
a FAVAR Approach
Abstract
This document identifies the relationship between the exchange rate and the different macroeconomic aggregates in the Colombian economy, mainly in production, consumption, inflation, trade balance, unemployment rate and investment, through the methodology Factor Augmented var (FAVAR). It is identified that an appreciation of the dollar generates significant changes in economic activity, the trade balance, prices, consumption, and public spending.
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References
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