Impact of the representative market rate on the CPI in Colombia Impacto de la tasa representativa del mercado en el IPC en Colombia

Abstract

Covid-19, which has generated unforeseen macroeconomic imbalances. Among the main effects, there is an increase of more than 30% in the Representative Market Rate in a period of two years, as well as the rise in unemployment, which exceeded double digits in 2021. Added to this are high inflation rates, driven by both internal and external factors, such as the war in Ukraine, which affected the oil and energy markets, and the closure of China due to Covid-19. At the internal level, the change of government and economic policies generated an economic compression, with high prices and higher interest rates. Therefore, we seek to explore the relationship between the Representative Market Rate and the Consumer Price Index, suggesting that an increase in the TRM makes imports more expensive, especially in a country like Colombia, which is more of an importer than an exporter. This affects both finished products and inputs and raw materials, increasing production costs and, therefore, the prices of most goods. To analyze this relationship, a VAR (Vector Autoregressive) model is used that evaluates data since 2001, allowing the identification of exogenous and endogenous variables. This article is based on previous research that has explored the influence of the TRM on the CPI, showing that the relationship is significant, especially in the short term. Through techniques such as the Phillips-Perron stationarity test and the Granger test, the existence of a causality between these variables is validated.