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The Political Economy of Fiscal Reform: The Case of Colombia, 1986-2006

Author

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  • Mauricio Olivera
  • Monica Pachon
  • Guillermo Perry

Abstract

This paper explores the characteristics of the political economy process that conditioned the scope and success of the combination of fiscal reforms before and after Colombia’s 1991 constitutional reforms. Using formal analysis of reforms and interviews with actors, reforms in taxation, decentralization, the budgetary process and pensions are examined in times of political crisis, economic crisis, and economic boom. The results generally confirm the hypothesis that increased political fragmentation and limited unilateral executive power after the 1991 reforms restricted the extent of reforms, particularly in tax law. Nonetheless, the enactment of piecemeal reforms was encouraged by crisis conditions.

Suggested Citation

  • Mauricio Olivera & Monica Pachon & Guillermo Perry, 2010. "The Political Economy of Fiscal Reform: The Case of Colombia, 1986-2006," Research Department Publications 4674, Inter-American Development Bank, Research Department.
  • Handle: RePEc:idb:wpaper:4674
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    References listed on IDEAS

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    1. Pablo T. Spiller & Ernesto H. Stein & Mariano Tommasi & Carlos Scartascini & Lee J. Alston & Marcus André Melo & Bernardo Mueller & Carlos Pereira & Cristóbal Aninat & John Londregan & Patricio Navia , 2008. "Policymaking in Latin America: How Politics Shapes Policies," IDB Publications (Books), Inter-American Development Bank, number 40178 edited by Ernesto H. Stein & Mariano Tommasi & Pablo T. Spiller & Carlos Scartascini, February.
    2. Mauricio Cardenas & Roberto Junguito & Mónica Pachón, 2006. "Political Institutions and Policy Outcomes in Colombia: The Effects of the 1991 Constitution," Research Department Publications 3198, Inter-American Development Bank, Research Department.
    3. Ulpiano Ayala Oramas & Roberto Perotti, 2000. "The colombian budget process," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 003574, FEDESARROLLO.
    4. Hernan Vallejo, 2006. "International trade, migration and investment with horizontal product differentiation and free entry and exit of firms," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO, November.
    5. Kahneman, Daniel & Tversky, Amos, 1979. "Prospect Theory: An Analysis of Decision under Risk," Econometrica, Econometric Society, vol. 47(2), pages 263-291, March.
    6. Eduardo Lora & Mauricio Olivera, 2004. "What makes reforms likely: Political economy determinants of reforms in Latin America," Journal of Applied Economics, Universidad del CEMA, vol. 7, pages 99-135, May.
    7. Allan Drazen & Marcela Eslava, 2006. "Pork Barrel Cycles," NBER Working Papers 12190, National Bureau of Economic Research, Inc.
    8. Mauricio Cárdenas & Roberto Junguito & Mónica Pachón, 2005. "Political institutions and policy outcomes in Colombia: the effects of the 1991 Constitution," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 003344, FEDESARROLLO.
    9. Alesina, Alberto & Drazen, Allan, 1991. "Why Are Stabilizations Delayed?," American Economic Review, American Economic Association, pages 1170-1188.
    10. Arbache, Jorge Saba, 2004. "Do Structural Reforms always Succeed? Lessons from Brazil," WIDER Working Paper Series 058, World Institute for Development Economic Research (UNU-WIDER).
    11. Mario García Molina & Ana Paola Gómez, 2005. "¿Han aumentado el recaudo las reformas tributarias en Colombia?," Revista de Economía Institucional, Universidad Externado de Colombia - Facultad de Economía, vol. 7(12), pages 43-61, January-J.
    12. Julio César Alonso & Maria Emma Cantera & Beatriz Orozco, 2006. "Sector Público Y Déficit Fiscal," APUNTES DE ECONOMÍA 003485, UNIVERSIDAD ICESI.
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    Cited by:

    1. Facundo Alveredo & Juliana Londoño Vélez, 2013. "High incomes and personal taxation in a developing economy: Colombia 1993-2010," Commitment to Equity (CEQ) Working Paper Series 12, Tulane University, Department of Economics.
    2. Facundo Alveredo & Juliana Londoño Vélez, 2013. "High incomes and personal taxation in a developing economy: Colombia 1993-2010," Commitment to Equity (CEQ) Working Paper Series 1312, Tulane University, Department of Economics.
    3. Marcela Eslava & Marcela Melendez, 2009. "Politics, Policies and the Dynamics of Aggregate Productivity in Colombia," Research Department Publications 4633, Inter-American Development Bank, Research Department.
    4. Sebastián Nieto-Parra & Mauricio Olivera, 2011. "Making reform happen in Colombia: the process of regional transfer reform," WORKING PAPERS SERIES. DOCUMENTOS DE TRABAJO 011554, FEDESARROLLO.
    5. Víctor Mauricio Castañeda Rodríguez, 2014. "El gasto social como factor que favorece una mayor dependencia del IVA. Un análisis para el caso colombiano," REVISTA ECOS DE ECONOMÍA, UNIVERSIDAD EAFIT, June.

    More about this item

    Keywords

    Policymaking process; Political economy; Structural reform; Colombia;

    JEL classification:

    • H20 - Public Economics - - Taxation, Subsidies, and Revenue - - - General
    • H71 - Public Economics - - State and Local Government; Intergovernmental Relations - - - State and Local Taxation, Subsidies, and Revenue
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism

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