The Effects of U.S. Monetary Policy on Colombia and Panama (2002-2007)

35 Pages Posted: 4 Nov 2012 Last revised: 15 Feb 2020

See all articles by Nicolas Cachanosky

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research; UCEMA Friedman-Hayek Center for the Study of a Free Society

Date Written: December 21, 2013

Abstract

I study the economies of Colombia (floating exchange rate) and Panama (dollarized) to illustrate how the monetary policy of a large economy can export capital structure distortions to small open economies that follow a different exchange rate regime. If these distortions bear enough weight, then economies with different exchange rate regimes include a common factor that causes their business cycles to appear similar, despite the conventional prediction which focuses on exchange rate as a transmission mechanism or moderator of a monetary shock.

Keywords: capital structure, foreign exchange rate, business cycle, small open economy, crisis contagion

JEL Classification: E32, E52, F21, F41

Suggested Citation

Cachanosky, Nicolas, The Effects of U.S. Monetary Policy on Colombia and Panama (2002-2007) (December 21, 2013). Quarterly Review of Economics and Finance, Vol. 54, No. 3, 2014, Available at SSRN: https://ssrn.com/abstract=2170566 or http://dx.doi.org/10.2139/ssrn.2170566

Nicolas Cachanosky (Contact Author)

Metropolitan State University of Denver ( email )

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890 Auraria Pkwy #310
Denver, CO 80217
United States

HOME PAGE: http://www.ncachanosky.edu

American Institute for Economic Research

PO Box 1000
Great Barrington, MA 01230
United States

UCEMA Friedman-Hayek Center for the Study of a Free Society ( email )

Buenos Aires
Argentina

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