INTERNATIONAL FINANCE

ANA MORALES
MARIA DEL PILAR ALMANZA
MARTHA ISABEL OSPINA
DIANA PAOLA RIVERA

Presented to:
DIEGO F. TELLEZ
Teacher

UNIVERSITY OF IBAGUE
INTERNATIONAL BUSINESS ADMINISTRATIO
IBAGUE
2011

ONAL FINANCE

MORALES
PILAR ALMANZA
SABEL OSPINA
PAOLA RIVERA

ented to:
F. TELLEZ
acher

TY OF IBAGUE
SINESS ADMINISTRATION
AGUE
2011

YEAR

2001

2002

2003

2004

MONTH

Jan-01
Feb-01
Mar-01
Apr-01
May-01
Jun-01
Jul-01
Aug-01
Sep-01
Oct-01
Nov-01
Dec-01
Jan-02
Feb-02
Mar-02
Apr-02
May-02
Jun-02
Jul-02
Aug-02
Sep-02
Oct-02
Nov-02
Dec-02
Jan-03
Feb-03
Mar-03
Apr-03
May-03
Jun-03
Jul-03
Aug-03
Sep-03
Oct-03
Nov-03
Dec-03
Jan-04
Feb-04
Mar-04
Apr-04
May-04
Jun-04
Jul-04

INFLATION
INFLATION EE.UU INTEREST RATE
COLOMBIA (CPI)
(CPI)
COLOMBIA (DTF)
1.05%
1.89%
1.48%
1.15%
0.42%
0.04%
0.11%
0.26%
0.37%
0.19%
0.12%
0.34%
0.80%
1.26%
0.71%
0.92%
0.60%
0.43%
0.02%
0.09%
0.36%
0.56%
0.78%
0.27%
1.17%
1.11%
1.05%
1.15%
0.49%
-0.05%
-0.14%
0.31%
0.22%
0.06%
0.35%
0.61%
0.89%
1.20%
0.98%
0.46%
0.38%
0.60%
-0.03%

7.09%
2.77%
0.68%
2.06%
6.30%
2.74%
-2.01%
0.00%
4.84%
-3.32%
-0.67%
-0.67%
2.05%
2.04%
3.42%
5.51%
1.35%
0.67%
2.71%
3.38%
2.01%
2.69%
2.00%
2.00%
5.41%
6.77%
1.98%
-4.47%
-1.95%
1.32%
4.00%
5.35%
3.97%
-1.29%
0.65%
3.29%
5.30%
2.61%
2.60%
1.94%
5.24%
4.56%
1.28%

13.50%
13.34%
13.02%
12.74%
12.72%
12.70%
12.66%
12.34%
11.86%
11.46%
11.48%
11.40%
11.21%
10.75%
10.60%
10.01%
9.07%
8.41%
7.86%
7.90%
7.93%
7.90%
7.89%
7.73%
7.68%
7.77%
7.76%
7.72%
7.79%
7.77%
7.82%
7.83%
7.80%
7.82%
7.93%
7.95%
7.98%
7.85%
7.80%
7.84%
7.81%
7.86%
7.83%

2004

2005

2006

2007

2008

Aug-04
Sep-04
Oct-04
Nov-04
Dec-04
Jan-05
Feb-05
Mar-05
Apr-05
May-05
Jun-05
Jul-05
Aug-05
Sep-05
Oct-05
Nov-05
Dec-05
Jan-06
Feb-06
Mar-06
Apr-06
May-06
Jun-06
Jul-06
Aug-06
Sep-06
Oct-06
Nov-06
Dec-06
Jan-07
Feb-07
Mar-07
Apr-07
May-07
Jun-07
Jul-07
Aug-07
Sep-07
Oct-07
Nov-07
Dec-07
Jan-08
Feb-08
Mar-08
Apr-08
May-08
Jun-08
Jul-08

0.03%
0.30%
-0.01%
0.28%
0.30%
0.82%
1.02%
0.77%
0.44%
0.41%
0.40%
0.05%
0.00%
0.43%
0.23%
0.11%
0.07%
0.54%
0.66%
0.70%
0.45%
0.33%
0.30%
0.41%
0.39%
0.29%
-0.14%
0.24%
0.23%
0.77%
1.17%
1.21%
0.90%
0.30%
0.12%
0.17%
-0.13%
0.08%
0.01%
0.47%
0.49%
1.06%
1.51%
0.81%
0.71%
0.93%
0.86%
0.48%

0.64%
3.87%
6.51%
5.81%
0.00%
-0.62%
5.13%
4.45%
3.79%
-0.62%
0.62%
7.69%
7.64%
17.83%
1.83%
-5.86%
0.00%
7.52%
0.60%
1.82%
6.18%
3.65%
3.02%
6.74%
5.45%
-5.73%
-5.20%
0.60%
6.73%
1.66%
5.19%
6.09%
4.55%
4.78%
2.04%
2.89%
0.20%
4.59%
4.04%
9.91%
3.50%
4.42%
2.89%
4.49%
3.74%
6.85%
11.31%
11.00%

7.76%
7.74%
7.68%
7.67%
7.76%
7.67%
7.41%
7.34%
7.29%
7.18%
7.18%
7.10%
6.99%
6.84%
6.46%
6.41%
6.30%
6.14%
6.01%
5.97%
5.93%
5.97%
6.12%
6.51%
6.37%
6.42%
6.42%
6.68%
6.75%
6.81%
6.80%
7.52%
7.45%
7.61%
8.02%
8.29%
8.54%
8.89%
8.59%
8.67%
8.98%
9.12%
9.30%
9.59%
9.79%
9.59%
9.75%
9.61%

2008

2009

2010

2011

Aug-08
Sep-08
Oct-08
Nov-08
Dec-08
Jan-09
Feb-09
Mar-09
Apr-09
May-09
Jun-09
Jul-09
Aug-09
Sep-09
Oct-09
Nov-09
Dec-09
Jan-10
Feb-10
Mar-10
Apr-10
May-10
Jun-10
Jul-10
Aug-10
Sep-10
Oct-10
Nov-10
Dec-10
Jan-11

0.19%
-0.19%
0.35%
0.28%
0.44%
0.59%
0.84%
0.50%
0.32%
0.01%
-0.06%
-0.04%
0.04%
-0.11%
-0.13%
-0.07%
0.08%
0.69%
0.83%
0.25%
0.46%
0.10%
0.11%
-0.04%
0.11%
-0.14%
-0.09%
0.19%
0.65%
0.91%

-1.92%
0.40%
-10.04%
-19.69%
-9.04%
3.32%
5.67%
-1.72%
1.29%
1.58%
8.47%
1.44%
4.20%
2.46%
2.75%
2.87%
1.12%
1.67%
0.58%
0.27%
0.08%
-1.67%
-2.48%
4.26%
2.49%
1.99%
3.02%
1.49%
5.30%
4.88%

9.96%
9.92%
10.02%
10.13%
10.12%
9.69%
8.98%
8.17%
7.12%
6.20%
5.52%
5.15%
5.08%
4.89%
4.41%
4.40%
4.12%
4.04%
4.00%
3.93%
3.92%
3.63%
3.54%
3.52%
3.50%
3.47%
3.45%
3.44%
3.50%
3.48%

INTEREST
RATE EE.UU
(Prime)
9.50%
8.50%
8.50%
8.00%
7.50%
7.00%
6.75%
6.75%
6.50%
6.00%
5.50%
5.00%
4.75%
4.75%
4.75%
4.75%
4.75%
4.75%
4.75%
4.75%
4.75%
4.75%
4.75%
4.25%
4.25%
4.25%
4.25%
4.25%
4.25%
4.25%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.00%
4.25%

TRM SPOT

TRM FORWARD

$ 2,241.40
$ 2,243.42
$ 2,278.78
$ 2,323.10
$ 2,346.93
$ 2,305.66
$ 2,304.28
$ 2,288.90
$ 2,328.23
$ 2,320.65
$ 2,310.47
$ 2,306.90
$ 2,274.96
$ 2,286.70
$ 2,282.33
$ 2,263.11
$ 2,310.24
$ 2,364.25
$ 2,506.72
$ 2,647.22
$ 2,751.23
$ 2,827.86
$ 2,726.66
$ 2,814.89
$ 2,913.00
$ 2,951.86
$ 2,959.01
$ 2,926.62
$ 2,858.94
$ 2,826.95
$ 2,858.82
$ 2,867.29
$ 2,840.08
$ 2,876.20
$ 2,844.55
$ 2,807.20
$ 2,749.14
$ 2,717.94
$ 2,670.80
$ 2,639.60
$ 2,719.43
$ 2,716.56
$ 2,653.32

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

2,114.91
2,224.25
2,296.80
2,302.31
2,217.17
2,245.04
2,354.07
2,294.85
2,228.98
2,404.84
2,328.93
2,330.45
2,247.13
2,269.11
2,222.45
2,164.60
2,293.22
2,358.60
2,441.17
2,562.86
2,706.66
2,769.27
2,693.92
2,767.10
2,795.82
2,795.29
2,932.07
3,098.90
2,930.01
2,788.72
2,744.91
2,730.04
2,737.56
2,915.50
2,836.05
2,734.31
2,634.01
2,680.67
2,628.59
2,601.25
2,593.73
2,613.78
2,619.05

DIFFERENCE

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(126.49)
(19.17)
18.02
(20.79)
(129.76)
(60.62)
49.79
5.95
(99.25)
84.19
18.46
23.55
(27.83)
(17.59)
(59.88)
(98.51)
(17.02)
(5.65)
(65.55)
(84.36)
(44.57)
(58.59)
(32.74)
(47.79)
(117.18)
(156.57)
(26.94)
172.28
71.07
(38.23)
(113.91)
(137.25)
(102.52)
39.30
(8.50)
(72.89)
(115.13)
(37.27)
(42.21)
(38.35)
(125.70)
(102.78)
(34.27)

PARITY RATE

$ 2,323.28
$ 2,343.50
$ 2,373.71
$ 2,425.06
$ 2,460.89
$ 2,428.48
$ 2,431.85
$ 2,408.76
$ 2,445.41
$ 2,440.19
$ 2,441.43
$ 2,447.51
$ 2,415.26
$ 2,417.68
$ 2,409.79
$ 2,376.75
$ 2,405.52
$ 2,446.86
$ 2,581.14
$ 2,726.83
$ 2,834.75
$ 2,912.90
$ 2,808.39
$ 2,908.85
$ 3,008.84
$ 3,051.53
$ 3,058.64
$ 3,024.03
$ 2,956.02
$ 2,922.40
$ 2,963.83
$ 2,972.88
$ 2,943.85
$ 2,981.85
$ 2,952.04
$ 2,913.82
$ 2,854.35
$ 2,818.56
$ 2,768.39
$ 2,737.06
$ 2,819.06
$ 2,817.39
$ 2,744.44

4.25%
4.50%
4.75%
4.75%
5.00%
5.25%
5.25%
5.50%
5.75%
5.75%
6.00%
6.25%
6.25%
6.50%
6.75%
7.00%
7.00%
7.25%
7.50%
7.50%
7.75%
7.75%
8.00%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
8.25%
7.75%
7.50%
7.50%
7.25%
6.00%
6.00%
5.25%
5.00%
5.00%
5.00%

$ 2,598.59
$ 2,552.78
$ 2,580.70
$ 2,530.19
$ 2,411.37
$ 2,362.96
$ 2,340.49
$ 2,353.71
$ 2,350.01
$ 2,339.22
$ 2,331.79
$ 2,323.38
$ 2,306.19
$ 2,294.52
$ 2,292.55
$ 2,279.85
$ 2,278.91
$ 2,273.66
$ 2,256.24
$ 2,262.36
$ 2,334.29
$ 2,417.99
$ 2,542.24
$ 2,511.74
$ 2,389.65
$ 2,398.88
$ 2,364.29
$ 2,290.46
$ 2,261.34
$ 2,237.06
$ 2,227.63
$ 2,201.39
$ 2,144.60
$ 2,007.91
$ 1,923.76
$ 1,950.87
$ 2,058.28
$ 2,117.05
$ 2,003.26
$ 2,047.72
$ 2,014.20
$ 1,980.59
$ 1,903.27
$ 1,846.90
$ 1,796.13
$ 1,778.01
$ 1,712.28
$ 1,783.09

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

2,582.93
2,464.98
2,422.75
2,397.96
2,418.60
2,397.30
2,249.05
2,270.69
2,274.09
2,363.41
2,326.65
2,158.49
2,142.43
1,955.64
2,256.62
2,424.52
2,280.51
2,126.13
2,257.50
2,237.47
2,208.38
2,340.61
2,475.08
2,362.77
2,274.88
2,552.12
2,490.42
2,282.35
2,123.54
2,217.45
2,142.54
2,100.09
2,069.66
1,922.08
1,887.49
1,899.23
2,051.57
2,025.78
1,925.68
1,871.79
1,955.54
1,916.79
1,877.78
1,781.84
1,743.68
1,679.45
1,551.53
1,614.05

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

(15.66)
(87.80)
(157.95)
(132.23)
7.23
34.34
(91.44)
(83.02)
(75.92)
24.19
(5.14)
(164.89)
(163.76)
(338.88)
(35.93)
144.67
1.60
(147.53)
1.26
(24.89)
(125.91)
(77.38)
(67.16)
(148.97)
(114.77)
153.24
126.13
(8.11)
(137.80)
(19.61)
(85.09)
(101.30)
(74.94)
(85.83)
(36.27)
(51.64)
(6.71)
(91.27)
(77.58)
(175.93)
(58.66)
(63.80)
(25.49)
(65.06)
(52.45)
(98.56)
(160.75)
(169.04)

$ 2,686.08
$ 2,631.93
$ 2,652.89
$ 2,600.72
$ 2,474.75
$ 2,417.29
$ 2,388.52
$ 2,394.76
$ 2,384.23
$ 2,370.85
$ 2,357.75
$ 2,341.97
$ 2,322.25
$ 2,301.85
$ 2,286.32
$ 2,267.28
$ 2,264.00
$ 2,250.13
$ 2,224.97
$ 2,230.16
$ 2,294.86
$ 2,378.05
$ 2,497.99
$ 2,471.37
$ 2,348.15
$ 2,358.33
$ 2,324.32
$ 2,257.24
$ 2,230.01
$ 2,207.30
$ 2,197.79
$ 2,186.54
$ 2,128.75
$ 1,996.04
$ 1,919.67
$ 1,951.59
$ 2,063.79
$ 2,129.57
$ 2,018.88
$ 2,070.01
$ 2,041.93
$ 2,015.12
$ 1,962.52
$ 1,909.45
$ 1,873.61
$ 1,855.73
$ 1,789.74
$ 1,861.38

5.00%
5.00%
5.00%
4.00%
4.00%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%
3.25%

$ 1,844.29
$ 2,066.04
$ 2,289.17
$ 2,329.16
$ 2,252.72
$ 2,252.98
$ 2,513.74
$ 2,477.21
$ 2,379.36
$ 2,229.95
$ 2,090.04
$ 2,052.68
$ 2,018.97
$ 1,980.77
$ 1,904.86
$ 1,973.57
$ 2,017.05
$ 1,978.19
$ 1,952.89
$ 1,909.10
$ 1,940.36
$ 1,984.36
$ 1,925.90
$ 1,874.52
$ 1,819.06
$ 1,805.60
$ 1,808.46
$ 1,863.67
$ 1,925.86
$ 1,866.64

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

1,883.89
2,053.99
2,553.68
2,908.34
2,487.47
2,193.44
2,398.86
2,533.09
2,356.60
2,195.38
1,925.63
2,022.82
1,938.44
1,931.08
1,851.44
1,917.16
1,996.25
1,959.11
1,957.83
1,908.71
1,947.78
2,020.06
1,977.12
1,797.13
1,776.77
1,767.83
1,753.79
1,839.80
1,840.77
1,795.98

$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$
$

39.60
(12.05)
264.51
579.18
234.75
(59.54)
(114.88)
55.88
(22.76)
(34.57)
(164.41)
(29.86)
(80.53)
(49.69)
(53.42)
(56.41)
(20.80)
(19.08)
4.94
(0.39)
7.42
35.70
51.22
(77.39)
(42.29)
(37.77)
(54.67)
(23.87)
(85.09)
(70.66)

$ 1,931.41
$ 2,162.85
$ 2,398.61
$ 2,466.45
$ 2,385.28
$ 2,393.50
$ 2,653.24
$ 2,595.25
$ 2,468.54
$ 2,293.66
$ 2,135.99
$ 2,090.45
$ 2,054.75
$ 2,012.23
$ 1,926.26
$ 1,995.55
$ 2,034.05
$ 1,993.33
$ 1,967.08
$ 1,921.67
$ 1,952.95
$ 1,991.66
$ 1,931.31
$ 1,879.42
$ 1,823.46
$ 1,809.45
$ 1,811.96
$ 1,867.10
$ 1,930.52
$ 1,870.80

$ 3,500.00
$ 3,000.00
$ 2,500.00

f(x) = 72838.8915108747
-8.9429585049542E-005 x )
- 0.2020389953x + exp(
10127.7021844058
R
0.4788569572
R =
= 0.5433264636
0.4588498127

$ 2,000.00
$ 1,500.00
$ 1,000.00
$ 500.00

$ 0.00
Jan-01 Aug-01 Mar-02 Oct-02 May-03 Dec-03 Jul-04 Feb-05 Sep$ 3,500.00
$ 3,000.00
$ 2,500.00
$ 2,000.00
$ 1,500.00
$ 1,000.00
$ 500.00
$ 0.00
Jan-01 Jul-01 Jan-02 Jul-02 Jan-03 Jul-03 Jan-04 Jul-04 Jan-05

$ 800.00
$ 600.00
$ 400.00
$ 200.00

$ 172.28

$ 800.00
$ 600.00
$ 400.00
$ 200.00

$ 172.28

$-

Jan-01 Jun-01 Nov-01 Apr-02 Sep-02 Feb-03 Jul-03 Dec-03M

$ (200.00)
$ (400.00)

TRM SPOT

xp(
-8.9429585049542E-005 x )
0127.7021844058
TRM SPOT

Linear (TRM S

Exponential (

Polynomial (T

y-03 Dec-03 Jul-04 Feb-05 Sep-05 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10

$ 2,908.34

$ 1,955.64
$ 1,614.05

03 Jul-03 Jan-04 Jul-04 Jan-05 Jul-05 Jan-06 Jul-06 Jan-07 Jul-07 Jan-08 Jul-08 Jan-09 Jul-09 Jan-10 Jul-10 Jan-11

DIFFERENCE
$ 579.18

$ 172.28

DIFFERENCE
$ 579.18

$ 172.28

2 Sep-02 Feb-03 Jul-03 Dec-03May-04 Oct-04 Mar-05 Aug-05 Jan-06 Jun-06 Nov-06 Apr-07 Sep-07 Feb-08 Jul-08 Dec-08May-0
$ (338.88)

TRM SPOT
Linear (TRM SPOT)
Exponential (TRM SPOT)
Polynomial (TRM SPOT)

10 Dec-10

PA
$ 3,500.00
$ 3,000.00
Historical
Theoretical

$ 2,500.00
$ 2,000.00
$ 1,500.00
$ 1,000.00
$ 500.00

09 Jan-10 Jul-10 Jan-11

$ 579.18

$ 0.00
Jan-01 Aug-01 Mar-02 Oct-02 May-03 Dec-03 Jul-04 Feb-05 Se

$ 579.18

p-07 Feb-08 Jul-08 Dec-08May-09 Oct-09 Mar-10 Aug-10 Jan-11

DIFFERENCE

PARITY RATE

May-03 Dec-03 Jul-04 Feb-05 Sep-05 Apr-06 Nov-06 Jun-07 Jan-08 Aug-08 Mar-09 Oct-09 May-10 Dec-10

PARITY RATE
TRM SPOT

y-10 Dec-10

PARITY RATE
TRM SPOT

Chapters

* The condition of purchasing power parity (interest) says there is no advantage in this a
another. The forces created by the arbitrators will boost money markets and foreign exch

* Basically should be indifferent to the fact that investing in foreign or local, when the int
currency in the premium or discount term foreign currency annually.
* The exchange rate is long term.
* Exchange rates and inflation rates are inversely related.
* The change in inflation countries is equal to the change in the types of exchange rate.

* The price of the basket of goods in Colombia is equal to the price in the same basket o
rate between dollars and weight in cash.

hapters

there is no advantage in this application for the grant or loan from one currency to
money markets and foreign exchange parity of coverage of interest.

in foreign or local, when the interest rate in domestic currency is equal to the foreign
y annually.

in the types of exchange rate.

the price in the same basket of goods to the United States, multiplied by the exchange

ANALYSIS

* We note that the exchange rate (TRM Spot) in the last 10 years has presented a descen
government and foreign capital inflows, which has increased the appreciation of the Colo

* Comparing the IPC of the two countries, one can see that inflation in Colombia has bee

* It is worth mentioning that 2008 was a year characterized by having a decreasing beha
which are highlighted contractionary policies in monetary and fiscal beginning of the sem

* From 2002 until 2006, Colombia entered into an economic growth cycle due to favorab
yield in its trade balance as a result of increased international demand for primary produ
increase in prices of raw materials globally. Thus, Colombia has benefited financially to t
exports achieved a good rate of economic growth.

* In addition, the outstanding economic growth in several countries said allowed the Colo
in an increase in remittances to Colombia, which in turn led to increased demand added
In other words, growth has made the price increase as seen in recent volumes of the CPI
raw materials and in turn increase the prices of some products, and has to generate a su
republic has problems controlling inflation.

Based on this, the Colombian Central Bank adopted a tight monetary policy through an i
seincrementaron interest rates after 2002, in order to stabilize prices, which in a certain

* Another factor that greatly affected the economy in 2008 was the U.S. subprime mortg
recession which is transmitted by many countries causing a global economic crisis, obtai
immune to the effects of this crisis, since a number of economic indicators were adverse

* Regarding the exchange rate dynamics, observed after a process of Colombian currenc
caused by reduced foreign exchange earnings, due to various reasons such as reduction
resulting from the uncertainty experienced in the economy.

NALYSIS

0 years has presented a descendant behavior due to economic changes and further reforms of
sed the appreciation of the Colombian peso.

at inflation in Colombia has been low and stable in general, which creates confidence among investors.

ed by having a decreasing behavior in the economic field, generated by a variety of reasons among
and fiscal beginning of the semester B of the year and the crisis international economic.

mic growth cycle due to favorable international conditions that allowed the Colombian economy a good
onal demand for primary products, which due to the increase in quantity demanded generated an
ia has benefited financially to the extent that increased both the quantity and the price of their

countries said allowed the Colombians living abroad had higher levels of income, which was reflected
ed to increased demand added by way of consumption and investment, increasing the Colombian GDP.
en in recent volumes of the CPI increased by 1%, but this increase also comes affect some inputs or
ducts, and has to generate a supply shock, in such cases it is more complex for the bank to get the

ht monetary policy through an increase in interest rates. As you can see the data in 2008,
bilize prices, which in a certain proportion contracted consumption and investment by 2008.

8 was the U.S. subprime mortgage crisis, which evolved to take on the U.S. economy into a state of
g a global economic crisis, obtaining inflation negative and large increase in the CPI. Colombia was not
onomic indicators were adversely affected, among which are the consumption and unemployment.

a process of Colombian currency appreciation, in 2009 there has been a devaluation, which could be
ious reasons such as reduction in remittances, falling exports and ultimately lower capital inflows
my.

her reforms of

ence among investors.

y of reasons among
conomic.

bian economy a good

ded generated an
e price of their

e, which was reflected

ng the Colombian GDP.
ffect some inputs or
he bank to get the

in 2008,
nt by 2008.

omy into a state of

CPI. Colombia was not
d unemployment.

tion, which could be

er capital inflows

CONCLUSIONS

* The Colombian economy was not fully protected from the crisis experienced at internat
as GDP, trade balance, price indexes, however the economic situation experienced by th

* The most influential variable was the rate of real exchange rate, but remains a close U.
Colombian exports, because the importing country is a world power and imports of Colom
The increase in small and stable inflation in the importing country has a great significanc

* Having a low domestic inflation to domestic products are not expensive at internationa
productivity in the sector so that in this way can achieve higher output with lower costs.

* In reality, all economies are non-tradable sectors that have no significant direct relation
transferred entirely to inflation, at least in the short term, however permanent movemen
influence on input prices.

* In practice, the relative purchasing power parity holds rare. First, because exchange ra

* In practice the law of one price can not be met by tariff barriers and transport costs, in
each country depend on the pricing policies of large companies have some market powe

NCLUSIONS

e crisis experienced at international level, which was manifested in critical performance indicators such
mic situation experienced by the country is not so serious Compared to other countries.

ge rate, but remains a close U.S. price index. Economic growth in the U.S. has little influence on
rld power and imports of Colombian products occupies a small percentage of total U.S. imports.
country has a great significance in the behavior of the Colombian nontraditional exports.

not expensive at international level and thus increase demand for our products. Improving
igher output with lower costs.

ve no significant direct relationship with international prices, this practice reduces the devaluation is
however permanent movements in the exchange rate can influence the prices of services, through its

re. First, because exchange rates are more volatile (less stable) than prices.

arriers and transport costs, in addition, not all products are subject to international trade and prices in
anies have some market power.

mance indicators such

ntries.

le influence on
al U.S. imports.
exports.
Improving

s the devaluation is
services, through its

nal trade and prices in

Recommendations

* Is the use of purchasing power parity and is one of the most fitting to compare living st
expectation that monetary indicator that is linked to changes in exchange rates, so that
purchasing power parity of a country, taking into account that the inhabitants of the cou

* It is advisable to take into account prices in the two countries, they must be measured
level of development, and with the same climatic and cultural conditions of both. In coun
different, so the absolute purchasing power parity does not apply.

* It is recommended that countries look to the exchange rate to grow at a faster pace th
exchange rate grows at a slower pace than inflation, the country loses competitiveness.

ecommendations

most fitting to compare living standards, since it takes into account price changes, removes the
ges in exchange rates, so that an appreciation or depreciation of a currency will not change the
that the inhabitants of the country receive their wages and shop in the same currency.

ntries, they must be measured by the same basket, and is possible only in countries with the same
tural conditions of both. In countries with different conditions, representative baskets are also
ot apply.

rate to grow at a faster pace than inflation for more competitive prices for their products. If the
country loses competitiveness.

s, removes the
not change the
rrency.

ries with the same

kets are also

roducts. If the

CIBERGRAPHY
http://www.banrep.gov.co/series-estadisticas/see_precios_ipc.htm
http://obiee.banrep.gov.co/analytics/saw.dll?Go&_scid=dSWYky0o-PE
http://www.clevelandfed.org/research/data/us-inflation/revmcpi.cfm
http://www.banrep.gov.co/series-estadisticas/see_tas_inter_capt_sem_men.htm
http://www.finanzas.com/economia/tipos-de-interes/eeuu/
http://www.moneycafe.com/library/primerate.htm
http://www.banrep.gov.co/series-estadisticas/see_ts_cam.htm
http://obiee.banrep.gov.co/analytics/saw.dll?Go&_scid=SnPI85NRpX4