Abstract

CHAMORRO-NARVAEZ, Raúl Alberto; SANTOS-OSPINA, Andrés Camilo  and  URREA-BERMUDEZ, Andrés Felipe. Regional Fiscal Policy and the Business Cycle in Colombia, 2000-2016. Ens. Econ. [online]. 2020, vol.30, n.57, pp.148-174.  Epub Apr 19, 2021. ISSN 0121-117X.  https://doi.org/10.15446/ede.v30n57.81407.

This paper estimates the elasticity of some fiscal variables to the regional GDP gap, measured as the difference between the observed growth and its long-term trend. By using panel data methodology with fixed and temporary effects we found that both total revenues and grants of regional level of government were procyclical for the period 2000-2016, opposite to what is expected. On the other hand, own-source incomes and total expenses showed aciclicity. These results suggest the presence of constraints of regional fiscal policy in Colombia in order to mitigate business cycles effects.

JEL: H39; H70; H71; H72.

Keywords : subnational fiscal policy; business cycles; regional GDP; grants.

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