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The Effect of Communication and Credibility on Fiscal Disagreement: Empirical Evidence from Colombia

Author

Listed:
  • Juan Camilo Galvis-Ciro

    (Universidad Pontificia Bolivariana)

  • Juan Camilo Anzoátegui-Zapata

    (Universidad Autónoma Latinoamericana)

  • Cristina Isabel Ramos-Barroso

    (Universidad de Medellí)

Abstract

This study analyzes the effects of communication and credibility on disagreement in fiscal expectations. We analyze the case of Colombia, a small emerging economy that monitors fiscal expectations through surveys and has made efforts to achieve its fiscal targets. Our methodology consists of observing fiscal targets over time to create a credibility index based on the objectives announced by the government and then estimating the effects of credibility on disagreement. The econometric results show that fulfillment of fiscal targets can reduce disagreement and the effect changes according to the economic cycle. In addition, international risk must also be monitored because it generates uncertainty, fiscal problems, and dispersion in expectations. The main policy recommendation is to improve fiscal policy management by designing more systematic communication strategies to anchor expectations to targets.

Suggested Citation

  • Juan Camilo Galvis-Ciro & Juan Camilo Anzoátegui-Zapata & Cristina Isabel Ramos-Barroso, 2022. "The Effect of Communication and Credibility on Fiscal Disagreement: Empirical Evidence from Colombia," Journal of Business Cycle Research, Springer;Centre for International Research on Economic Tendency Surveys (CIRET), vol. 18(3), pages 215-238, November.
    • Handle: RePEc:spr:jbuscr:v:18:y:2022:i:3:d:10.1007_s41549-022-00070-0
    DOI: 10.1007/s41549-022-00070-0
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    More about this item

    Keywords

    Disagreements; Fiscal expectations; Communication; Credibility;
    All these keywords.

    JEL classification:

    • E37 - Macroeconomics and Monetary Economics - - Prices, Business Fluctuations, and Cycles - - - Forecasting and Simulation: Models and Applications
    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory

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