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On the determinants of fiscal sustainability of municipalities in Colombia. The case of Antioquia, 2008-2017

Author

Listed:
  • Jorge Barrientos-Marín

    (Universidad de Antioquia)

  • Juan Felipe Quintero-Vanegas

    (Universidad Autónoma Latinoamericana)

  • Manuela Mendoza-Jaramillo

    (Universidad Autónoma Latinoamericana)

Abstract

In this work we are interested in establishing the determinants of fiscal sustainability, including if the spending rules, such as Law 617 of 2000 contributed to the promotion of the sustainability of public finances in the 125 municipalities of the department of Antioquia (Colombia) in the period 2008-2017. For this we exploit the observable heterogeneities between the 125 municipalities of Antioquia in the period 2008-2017, due to the endogeneity of variables such as debt and the number of companies we use a Hausman and Taylor estimator. Our econometrics results are statistical significant and the estimated parameters suggest that the law is effective in increasing tax revenue and investment spending, but they are not conclusive about effectiveness in reducing operating expenses; other variables of municipality characteristics such as the number of companies and pre-existing indebtedness are explanatory and predictive of the behavior of tax revenues, operating expenses and investment expenditure

Suggested Citation

  • Jorge Barrientos-Marín & Juan Felipe Quintero-Vanegas & Manuela Mendoza-Jaramillo, 2020. "On the determinants of fiscal sustainability of municipalities in Colombia. The case of Antioquia, 2008-2017," Lecturas de Economía, Universidad de Antioquia, Departamento de Economía, issue 92, pages 173-200, Enero-Jun.
    • Handle: RePEc:lde:journl:y:2020:i:92:p:173-200
    DOI: 10.17533/udea.le.n92a06
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    References listed on IDEAS

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    More about this item

    Keywords

    public finances; fiscal sustainability; budget deficit; deficit bias; random and fixed effect; endogeneity;
    All these keywords.

    JEL classification:

    • H1 - Public Economics - - Structure and Scope of Government
    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • H60 - Public Economics - - National Budget, Deficit, and Debt - - - General
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models

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