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RINCON, Hernán; RODRIGUEZ, Diego; TORO, Jorge  and  TELLEZ, Santiago. FISCO: Fiscal Model for Colombia. Ens. polit. econ. [online]. 2017, vol.35, n.83, pp.161-187. ISSN 0120-4483.

The government is an agent that influences economic activity throughout the economic cycle, thereby affecting a country's real and nominal variables through income and spending policies. The purpose of this document is to construct a neo-Keynesian dynamic stochastic general equilibrium model (DSGE) for Colombia in which the government plays a key role in the economy. The five main conclusions of the document show that inflation is relevant for both monetary and fiscal policies; shocks to fiscal policy are offset to a certain degree by monetary policy, while shocks to monetary policy are endorsed by fiscal policy; additionally, cuts to public investment impact economic cycles to a greater extent than government spending cuts, and the fiscal rule helps to stabilise government finances in the face of certain shocks.

JEL classification: D58, E20, E62, E63, C11, C13.

Keywords : Neo-Keynesian DSGE model; Fiscal policy; Monetary policy; Transmission channels and mechanisms; Structural fiscal rule.

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