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National Treasury and Banco de la República: evidence of the MMT for Colombia 2007-2018

Lecturas de Economia, ISSN: 2323-0622, Vol: 98, Issue: 98, Page: 87-119
2023
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Article Description

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.

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