Fiscal policy in Colombia boosts economy, stabilizes output during crises.
The study looked at how government spending affects the economy in Colombia. They found that when the government spends more money, it boosts output, consumption, employment, prices, and interest rates. The impact lasts for up to three years, with the economy growing by 1.12 to 1.19 times the initial spending. Taxes on income mainly affect private investment, while indirect taxes have less impact on the economy. Overall, the results show that government spending can help stabilize the economy during uncertain times.