Publications

2023

1. 

   Who would bear a reduction of the corporate income tax?

   Hernan Rincon Castro ,  and  Juan Pablo Angel Mojica

   Borradores de Economı́a; No. 1260, 2023

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   The objective of the study is to model and determine the tax incidence of a reduction in the corporate income tax in Colombia. To meet this objective, a dynamic and stochastic general equilibrium model DSGE of a closed economy with heterogeneous households and two types of capital is used. These make it possible to easily include the skill-premium and the complementarity of capital with labor skills (capital-skill complementarity), variables that are determinants of changes in the distribution of income and the welfare of the different types of households. The results indicate that a reduction in the corporate income tax increases economic growth but generates unwanted redistributive effects and is not optimal in the Pareto sense, since, depending on the type of fiscal consolidation instrument used, it can enlarge the distribution income gap and negatively affect the welfare of those households with financial constraints and less qualified. To achieve at the same time a lower tax burden on companies and greater economic growth, but with more equity and welfare for all households, alternative instruments are required

   @article{rincon2023quien,
     title = {Who would bear a reduction of the corporate income tax?},
     author = {{Rincon Castro}, Hernan and {Angel Mojica}, Juan Pablo},
     journal = {Borradores de Econom{\'\i}a; No. 1260},
     year = {2023},
     publisher = {Banco de la Rep{\'u}blica de Colombia},
     doi = {10.32468/be.1260},
   }

2. 

   A Deep Dive into Tax Buoyancy: Comparing Estimation Techniques in a Large Heterogeneous Panel

   Antoine Cornevin ,  Juan Corrales ,  and  Juan Pablo Angel Mojica

   IMF Working Papers, 2023

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   This paper provides new empirical evidence on tax buoyancy (tax revenues responsiveness to changes in economic activity) over the period 1990-2020 using a large panel of 185 countries. This study compares short-term and long-term buoyancy coefficients for total tax revenues and different individual taxes by reviewing and contrasting a range of estimators. Our results broadly confirm the main body of the literature on long-term buoyancy hovering around one. We find evidence of lower estimates for short-term buoyancy relative to previous literature, suggesting a limited automatic stabilization power of taxes. As a robustness exercise, in addition to changes in tax rates, we introduce novel control variables for tax exemptions and bases to disentangle discretionary from automatic tax revenue changes. The marginal changes in the results when controlling for policy actions suggest that, on average, the economic cycle does not necessarily influence tax reforms.

   @article{ADeepDiveintoTaxBuoyancyComparingEstimationTechniquesinaLargeHeterogeneousPanel,
     author = {{Cornevin}, Antoine and {Corrales}, Juan and {Angel Mojica}, Juan Pablo},
     title = {A Deep Dive into Tax Buoyancy: Comparing Estimation Techniques in a Large Heterogeneous Panel},
     journal = {IMF Working Papers},
     year = {2023},
     publisher = {International Monetary Fund},
     doi = {10.5089/9798400238376.001.A001},
   }

2023

1. 

   Annex IV. A Dynamic Stochastic General Equilibrium (DSGE) Model to Quantify the Return of Investment in Resilient Infrastructure

   Juan Pablo Angel Mojica

   2023

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   Staff assessed the net benefits of investing in resilient infrastructure through a highly stylized Dynamic Stochastic General Equilibrium (DSGE) model. The model was developed to quantify the return of investment in infrastructure resilient to natural disasters—such as cyclones, tornadoes, and floods that destroy a share of public and private capital and temporary reduce productivity—as well as the macroeconomic impact of climate change based on an explicit parametrization of frequency and intensity of natural disasters, which affect not only the near-term dynamic responses of the economy after each natural disaster but also the long run equilibrium.

   @techreport{jamaica,
     author = {{Angel Mojica}, Juan Pablo},
     title = {Annex IV. A Dynamic Stochastic General Equilibrium (DSGE) Model to Quantify the Return of Investment in Resilient Infrastructure},
     journal = {IMF Country Reports},
     institution = {International Monetary Fund},
     year = {2023},
   }

2021

1. Using Macroeconomic Frameworks to Analyze the Impact of COVID-19: An Application to Colombia and Cambodia

   Ales Bulir ,  Daniel Baksa ,  Juan Corrales , and 3 more authors

   2021

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   This technical note and manual (TNM) addresses the following issues: • Evaluating the full implications from the policies adopted to mitigate the impact of the COVID-19 pandemic on the economy requires a well-developed macroeconomic framework. This note illustrates how such frameworks were used to analyze Colombia and Cambodia’s shock impact at the beginning of the pandemic. • The use of macroeconomic frameworks is not to infer general policy conclusions from abstract models or empirical analysis but to help policymakers think through and articulate coherent forecasts, scenarios, and policy responses. • The two country cases illustrate how to construct a baseline scenario consistent with a COVID-19 shock within structural macroeconomic models. The scenario is built gradually to incorporate the available information, the pandemic’s full effects, and the policy responses. • The results demonstrate the value of combining close attention to the data, near-term forecasting, and model-based analyses to support coherent policies.

2020

1. Sistema pensional colombiano: descripción, tendencias demográficas y análisis macroeconómico

   Julián Andrés Parra-Polanía ,  and  al

   Sep 2020

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   The article contributes to the study of the current state and the economic outlook of the pension system in Colombia by means of three types of analysis: (i) the description of the system based on statistics about coverage, fidelity rates, transfers between regimes and impact on public finances, among others, (ii) estimations and long-run projections of demographic trends in Colombia and (iii) the analysis of the evolution and the effect of the two main regimes (the pay-as-you-go scheme and the private-savings one) on macroeconomic variables such as savings, interest rates, wages, taxes and social welfare.