Volatilidad del tipo de cambio nominal en Costa Rica

Abstract

This technical note makes a recount of the volatility of the exchange rate of the Costa Rican colon with respect to the US dollar since 1983. This is done through two common volatility measures: a stardard deviation and a GARCH volatility estimate. Historically, eight high volatility episodes are identified. These happened mostly during the exchange rate band regime, which is also the regime that showed higher volatility, on average. To complement this analysis, the volatility measures are compared to a group of 154 additional currencies. This leads to the conclusion that only two of the high volatility episodes can be considered of high volatility, internationally. In addition, that most of the time, there are more currencies showing a higher volatility than the colon than currencies showing lower volatility.