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Fiscal policy in Colombia and a prospective analysis after the 2008 financial crisis

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  • Ignacio Lozano

Abstract

The purpose of this study is twofold: First, it provides an empirical characterization of fiscal policy in Colombia over the last decades, by assessing the three most relevant macroeconomic factors: the behavior of fiscal policy over the business cycle; whether it has been coherent with the long-term debt sustainability; and, whether it has been a significant source of macroeconomic volatility. The results are compared internationally. Second, it evaluates the fiscal stance of the Colombian authorities during the 2008 global financial crisis, and examines the adoption of a fiscal rule as an appropriate tool to manage public finances beyond the recovery phase.

Suggested Citation

  • Ignacio Lozano, 2010. "Fiscal policy in Colombia and a prospective analysis after the 2008 financial crisis," Borradores de Economia 596, Banco de la Republica de Colombia.
    • Handle: RePEc:bdr:borrec:596
    DOI: 10.32468/be.596
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    References listed on IDEAS

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    1. Hakkio, Craig S & Rush, Mark, 1991. "Is the Budget Deficit "Too Large?"," Economic Inquiry, Western Economic Association International, vol. 29(3), pages 429-445, July.
    2. Gregory, Allan W & Hansen, Bruce E, 1996. "Tests for Cointegration in Models with Regime and Trend Shifts," Oxford Bulletin of Economics and Statistics, Department of Economics, University of Oxford, vol. 58(3), pages 555-560, August.
    3. Roberto Perotti, 1999. "Fiscal Policy in Good Times and Bad," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 114(4), pages 1399-1436.
    4. Gregory, Allan W. & Hansen, Bruce E., 1996. "Residual-based tests for cointegration in models with regime shifts," Journal of Econometrics, Elsevier, vol. 70(1), pages 99-126, January.
    5. Paolo Manasse, 2006. "Procyclical Fiscal Policy: Shocks, Rules, and Institutions: A View From Mars," IMF Working Papers 2006/027, International Monetary Fund.
    6. Roberto Perotti, 2005. "Estimating the effects of fiscal policy in OECD countries," Proceedings, Federal Reserve Bank of San Francisco.
    7. Ignacio Lozano & Enrique Cabrera, 2010. "Una nota sobre la sostenibilidad fiscal y el nexo entre los ingresos y gastos del Gobierno colombiano," Monetaria, CEMLA, vol. 0(2), pages 207-238, abril-jun.
    8. Michael Gavin & Roberto Perotti, 1997. "Fiscal Policy in Latin America," NBER Chapters, in: NBER Macroeconomics Annual 1997, Volume 12, pages 11-72, National Bureau of Economic Research, Inc.
    9. Ignacio Lozano & Jorge Toro, 2007. "Fiscal Policy Throughout the Business Cycle: The Colombian Experience," Revista ESPE - Ensayos Sobre Política Económica, Banco de la República, vol. 25(55), pages 12-39, December.
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    Cited by:

    1. Hernando Vargas & Andrés González & Ignacio Lozano, 2015. "Macroeconomic Gains from Structural Fiscal Policy Adjustments: The Case of Colombia," Economía Journal, The Latin American and Caribbean Economic Association - LACEA, vol. 0(Spring 20), pages 39-81, February.
    2. Gerson Javier Pérez-Valbuena & Paula Barrios, 2022. "Subnational fiscal accounts under pressure: the effects of COVID-19 in a developing country," Documentos de trabajo sobre Economía Regional y Urbana 306, Banco de la Republica de Colombia.
    3. Shijaku, Gerti, 2012. "Sustainability of fiscal policy: the case of Albania," MPRA Paper 79089, University Library of Munich, Germany.

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    More about this item

    Keywords

    Fiscal policy; business fluctuations; banking crisis; rules vs. discretion .;
    All these keywords.

    JEL classification:

    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • E32 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Business Fluctuations; Cycles
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • E69 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Other

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