 10.18235/0013913Alejandro Ome, Laura Giles Álvarez, Cristhian Larrahondo and Jorge Pérez No 14474, IDB Publications (Working Papers) from Inter-American Development Bank Abstract: This study analyzes the impact of natural resource funds (NRF) on municipal fiscal results in Colombia, using an instrumental variable approach. It specifically analyzed the case of the Colombian Savings and Price Stabilization Fund (FAEP). The results suggest that a 1 percent increase in royalty revenue caused a 0.2 percent increase in gross capital formation (GCF) expenses and that this effect was cancelled out by FAEP participation. We also find that neither resource revenue windfalls nor participation in the FAEP had any impact on operating expenses nor on tax revenues, and that resource revenues have had impact on capital expenses other than GCF, but FAEP participation did not. Although we find that the NRF was indeed effective in reining in GFC expenses, the results suggest that other factors, such as subnational fiscal rules, could have had a strong effect on operating and other investment spending. Countries should thus consider a range of instruments to promote fiscal discipline and smooth out spending, including regulation and NRFs, in the face of natural resource revenue windfalls. Keywords: natural resource funds; local public finances; instrumental variables (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:idb:brikps:14474 DOI: 10.18235/0013913 Access Statistics for this paper More papers in IDB Publications (Working Papers) from Inter-American Development Bank Contact information at EDIRC. |
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