Coffee export booms and monetary disequilibrium: Some evidence for Colombia

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Abstract

The theoretical models that analyse the monetary consequences of export booms show that under a regime of fixed exchange rates, they affect not only the demand for money, via real income, but also the money supply via foreign exchange accumulation. Within this theoretical framework, this study proposes an empirical approach to determine whether the coffee booms of the second half of the 1970s and mid-1980s led to excess money supply in the Colombian economy. The findings provide evidence in favour of a direct association between coffee export booms and excess money supply, implying that external disturbances jeopardize the ability of the economic authorities to carry out successful monetary policy.

Original languageEnglish (US)
Pages (from-to)267-276
Number of pages10
JournalApplied Economics
Volume33
Issue number2
DOIs
StatePublished - 2001

All Science Journal Classification (ASJC) codes

  • Economics and Econometrics

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