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The Territorial Fiscal Gap in Colombia

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  • Jaime Bonet-Morón
  • Jhorland Ayala-García

    (Banco de la República)

Abstract

This paper presents an estimation of expenditure needs and fiscal capacity of Colombia’s municipalities and departments in 2014. We use standard per capita norms to estimate the spending needs and data envelopment analysis for the local fiscal capacity. The results show that: (i) there are high horizontal fiscal disparities in Colombia, with greater incidence in municipalities than in departments; (ii) these disparities favor more developed territories; and (iii) there is evidence of a centerperiphery pattern in the horizontal fiscal disparities, causing central regions of the country to have a lower imbalance between expenditure needs and fiscal capacity. An equalization transfers system is an option for public policy to eliminate these disparities.

Suggested Citation

  • Jaime Bonet-Morón & Jhorland Ayala-García, 2017. "The Territorial Fiscal Gap in Colombia," Documentos de trabajo sobre Economía Regional y Urbana 251, Banco de la Republica de Colombia.
  • Handle: RePEc:bdr:region:251
    DOI: 10.32468/dtseru.251
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    Cited by:

    1. Jhorland Ayala-Garcia & Sandy Dall'Erba & William C. Ridley, 2021. "Externalities of extreme natural disasters on local tax capacity," Documentos de trabajo sobre Economía Regional y Urbana 299, Banco de la Republica de Colombia.
    2. Adolfo Meisel-Roca & Diani Ricciulli-Marín, 2018. "La pobreza en Santa Marta: Los estragos del bien," Revista Economía y Región, Universidad Tecnológica de Bolívar, vol. 12(2), pages 43-105, December.
    3. Eduardo A. Haddad & Luis A. Galvis & Inácio F. Araújo-Junior & Vinicius A.Vale, 2018. "Impact Assessment of Scenarios of Interregional Transfers in Colombia," Documentos de Trabajo Sobre Economía Regional y Urbana 016767, Banco de la República - Economía Regional.
    4. Jaime Bonet-Morón & Yuri Reina-Aranza & Diana Ricciulli-Marin, 2018. "Movimientos sociales y desarrollo económico en Chocó y Buenaventura," Documentos de trabajo sobre Economía Regional y Urbana 270, Banco de la Republica de Colombia.

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    More about this item

    Keywords

    horizontal fiscal disparities; fiscal capacity; fiscal needs; data envelopment analysis;
    All these keywords.

    JEL classification:

    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H73 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Interjurisdictional Differentials and Their Effects
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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