Financial Accelerator Mechanism in a Small Open Economy


  • Borradores de economía


  • Using Bayesian estimation techniques, we estimate a small open economy DSGE model with credit-market imperfections for the Colombian economy. Using the estimated model we investigate what are the sources of business cycle fluctuations. We show that balance-sheet effects play an important role in explaining recent Colombian business cycles. We then perform a counterfactual exercise that shows that fixed exchange rate regime could have exacerbated the financial distress in the economy between 1998-1999.

fecha de publicación

  • 2008-08

Líneas de investigación

  • Bayesian Estimation
  • DSGE Modelling
  • Financial Accelerator


  • 525