Abstract

MONTOYA OLARTE, Miguel Alfonso. National Treasury and Bank of the Republic: evidence of Modern Monetary Theory for Colombia (2007-2018). Lect. Econ. [online]. 2023, n.98, pp.97-129.  Epub Oct 24, 2023. ISSN 0120-2596.  https://doi.org/10.17533/udea.le.n98a347832.

The aim of this article is to review the main approaches of modern monetary theory (MMT) and to present, based on this theory, an empirical contrast for the period 2007-2018 between the treasury operations of the national government and the monetary operations of the Bank of the Republic of Colombia. It was found that the deficit of the Government Treasury and the net disbursements of TES securities were regularly compensated by the monetary operations of the Bank of the Republic, which evidenced the capacity of the issuer to control short- and medium-term interest rates, as described by the MMT. Despite the self-legal restrictions for the issuer to finance the government, the results presented validate the coordination of the fiscal and monetary operations proposed by the MMT. According to this, it is possible to aim at full employment, through guaranteed work, which, however, must be accompanied by a process of productive transformation.

Keywords : Modern Monetary Theory; fiscal policy; public debt; monetary policy; interest rates.

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