Disinflation Costs Under Inflation Targeting in Small Open Economy

Borradores de Economia
Number: 
328
Published: 
Classification JEL: 
E31, E32, E52, F41
Keywords: 
Human capital agglomeration, Social returns, Private returns, Externalities, Uncertainty, Fiscal policy

Since 1991, inflation in Colombia was reduced from 25% on average to about 6% more recently. Although this performance is in line with a long run inflation target of 3%, some analysts ask whether the Central Bank should continue disinflating. In this pa