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Macroeconomic effects of structural fiscal policy changes in Colombia

In: Fiscal policy, public debt and monetary policy in emerging market economies

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Author Info

  • Hernando Vargas
  • Andrés Gonzalez
  • Ignacio Lozano

Abstract

In the past decade the Colombian Economic Authorities undertook a series of measures that reduced the structural fiscal deficit, decreased the Government currency mismatch and deepened the local fixed-rate public bond market. This paper presents some evidence suggesting that these improvements had important effects on the behavior of the macroeconomy. They seem to have permanently reduced the sovereign risk premium, increased the reaction of output to Government expenditure shocks and strengthened the response of market interest rates to monetary policy shocks.

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This chapter was published in:

  • Bank for International Settlements, 2012. "Fiscal policy, public debt and monetary policy in emerging market economies," BIS Papers, Bank for International Settlements, number 67, May.
    This item is provided by Bank for International Settlements in its series BIS Papers chapters with number 67-09.

    Handle: RePEc:bis:bisbpc:67-09

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    References

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    1. Andrés González & Franz Hamann, . "Lack of Credibility, Inflation Persistence and Disinflation in Colombia," Borradores de Economia 658, Banco de la Republica de Colombia.
    2. Hernando Vargas Herrera & Franz Hamann & Andrés González, . "Efectos de la política monetaria sobre las tasas de interés de los créditos hipotecarios en Colombia," Borradores de Economia 592, Banco de la Republica de Colombia.
    3. Favero, Carlo A & Giavazzi, Francesco, 2004. "Inflation Targeting and Debt: Lessons from Brazil," CEPR Discussion Papers 4376, C.E.P.R. Discussion Papers.
    4. Roberto Perotti, 2008. "In Search of the Transmission Mechanism of Fiscal Policy," NBER Chapters, in: NBER Macroeconomics Annual 2007, Volume 22, pages 169-226 National Bureau of Economic Research, Inc.
    5. Franz Alonso Hamann Salcedo & Luis Ignacio Lozano Espitia & Luis -Fernando Mejía, 2011. "Sobre el impacto macroeconómico de los beneficios tributarios al capital," BORRADORES DE ECONOMIA 008952, BANCO DE LA REPÚBLICA.
    6. Ignacio Lozano & Karen Rodríguez, . "Assessing the Macroeconomic Effects of Fiscal Policy in Colombia," Borradores de Economia 552, Banco de la Republica de Colombia.
    7. Juan Manuel Julio R. & Ignacio Lozano & Ligia Alba Melo B., 2012. "Quiebre estructural de la relación entre la política fiscal y el riesgo soberano en las economías emergentes: el caso colombiano," BORRADORES DE ECONOMIA 009316, BANCO DE LA REPÚBLICA.
    8. Ethan Ilzetzki & Carlos A. Vegh, 2008. "Procyclical Fiscal Policy in Developing Countries: Truth or Fiction?," NBER Working Papers 14191, National Bureau of Economic Research, Inc.
    9. Carolina Mejía Mantilla & Mauricio Cárdenas & Mauricio Olivera, 2006. "La economía política del proceso presupuestal en Colombia," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 002988, FEDESARROLLO.
    10. Caldara, Dario & Kamps, Christophe, 2008. "What are the effects of fiscal policy shocks? A VAR-based comparative analysis," Working Paper Series 0877, European Central Bank.
    11. Arturo José Galindo & Marc Hofstetter, 2008. "Mortgage Interest Rates, Country Risk and Maturity Matching in Colombia," DOCUMENTOS CEDE 004544, UNIVERSIDAD DE LOS ANDES-CEDE.
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    Cited by:
    1. María Lorena Mari del Cristo & Marta Gómez-Puig, 2014. "Dollarization and the relationship between embi and fundamentals latin american countries," Working Papers 14-05, Asociación Española de Economía y Finanzas Internacionales.
    2. Ken Miyajima & Madhusudan Mohanty & Tracy Chan, 2012. "Emerging market local currency bonds: diversification and stability," BIS Working Papers 391, Bank for International Settlements.
    3. Juan José Echavarría & Andrés González & Enrique López & Norberto Rodíguez, 2012. "Choques internacionales reales y financieros y su impacto sobre la economía colombiana," Borradores de Economia 728, Banco de la Republica de Colombia.

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