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

35 Pages Posted: 4 Nov 2012 Last revised: 23 Mar 2014

Nicolas Cachanosky

Metropolitan State University of Denver; American Institute for Economic Research

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, Forthcoming. 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 )

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

Register to save articles to
your library

Register

Paper statistics

Downloads
234
rank
121,256
Abstract Views
1,553
PlumX