Browsing by Author "Laverde-Molina, Bernal"
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- Evaluación de variables para proyecciones de inflaciónThe main goal of this document is to find variables that are able to improve inflation forecasts made by Central Bank of Costa Rica. Fifty nine monthly economic variables that might have an effect on inflation are assessed in this investigation. These variables are classified in financial, economic activity and fiscal groups. The results include several forecasting equations with lagged inflation, domestic government bonds and three sorts of interest rates as explicative variables. The evidence indicates that inflation rises when interest rates increase, which is associated with price puzzle. An expansive fiscal policy financed by domestic bonds seems to have a direct impact on inflation. The forecast performance of selected models is similar to the performance of BCCR current models. Combined inflation forecasts could be improved by adding some of the results of this investigation, in particular, by considering the information of fiscal pressures implicit on the monetary programming exercise.
- Identificación del grado de competencia en el mercado bancario costarricenseThe objective of this work is to identify the degree of competition in the Costa Rican banking industry, based on the model developed by Bresnahan (1982). This model extracts information from aggregated industry data and calculates a coefficient λ, that measures the discrepancy between the demand function and the marginal income faced by the banking system. Monthly time series from June-1997 to June-2004 were used in the estimation. This information was divided in public banks, private banks and the whole banking system. The main results indicate that the Costa Rican banking system does not behave as a perfect competition market and certain monopolistic behavior is present. This market power is basically held by public banks. Market power in the banking system implies that the volume of bank services (credit and deposits) is below the social optimal. Moreover, it reduces the contribution of the financial system to economic growth and social welfare. In addition, the market power held by banks would reduce the effectiveness of the interest rate as an instrument of monetary policy.
- Pass through del tipo de cambio en los precios de bienes transables y no transables en Costa RicaThis paper estimates short run and long run coefficients of exchange rate pass through in to the prices of tradable and non tradable goods in Costa Rica. The coefficients are estimated by OLS. A VAR analysis is conducted in order to estimate the dynamic process between exchange rate and inflation. Granger causality test and a stability test are conducted too. The short run pass through coefficients are 13% and 10%, for tradable and non tradable goods respectively and the long run coefficients are 68% and 52% in the same order. There is a second stage pass through of 7% included in the long run coefficient for non tradable goods. The dynamic analysis shows that the adjustment process of prices as a result of an exchange rate shock takes 17 months for tradable goods and 27 months for non tradable goods. The Granger causality test shows precedence between variation in the exchange rate and inflation, and between the prices of tradable and non tradable goods. There is statistical evidence of a structural change in the non tradable model between the end of 1995 and the beginning of 1996.