Seigniorage and the welfare cost of inflation in Colombia

López, Martha

doi:10.32468/espe.3903

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Calibration1

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2014

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“…The elasticity of output to capital, , is set to 0.3 to be consistent with the labor income share. The relative risk aversion coefficient,  R , was set at 2.0 according with estimates by López (2001). We fix the steady state world interest rate at 3 per cent per annum.…”

Section: Calibrationmentioning

confidence: 99%

Fiscal Policy in a Small Open Economy with Oil Sector and non-Ricardian Agents

González¹,

López²,

Rodríguez³

et al. 2014

Revista Desarrollo y Sociedad

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In this paper we develop a dynamic stochastic general equilibrium fiscal model for the Colombian economy. The model has three main components: the existence of non-Ricardian households, price and wage rigidities, and a fiscal authority that finances government spending partly with public debt. The model is calibrated to capture the empirical evidence on the macroeconomic effects of government spending and it is used to study the effect of an oil price shock under different fiscal policy rules. Our results show that fiscal multipliers in Colombia are 1 We thank Hernando Vargas, Eduardo Sarmiento Gómez, Jesus A. Bejarano and Sergio Ocampo for comments on earlier drafts. We also thank Guilherme de Almeida Bandeira for early research assistance in the model. The views expressed in the paper are those of the authors and do not represent those of the Banco de la República or its Board of Directors.

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Section: Calibrationmentioning

confidence: 99%