(Con Liliana Heredia, Angie Nieto y Gabriel Millan. Coyuntura Económica: Investigación Económica y Social, 54)
Este estudio evalúa las tasas efectivas de tributación corporativa por actividades económicas en Colombia, enfocándose en el impuesto sobre la renta y los beneficios tributarios otorgados a las empresas. El análisis subraya la necesidad de debatir la justificación de estos beneficios, dado su impacto en la asignación de recursos y el recaudo tributario. Para el año 2021, se estimó que los beneficios tributarios resultaron en una pérdida de recaudo estimada de 14 billones de pesos, lo que afecta la capacidad del país para financiar programas sociales y reducir la presión tributaria sobre otras actividades económicas. Los resultados indican una notable dispersión en la presión fiscal asumida por las diferentes actividades económicas. Por ejemplo, actividades como el transporte aéreo de pasajeros y las actividades relacionadas con el mercado de valores asumieron tasas efectivas inferiores al 5%, mientras la fabricación de maquinaria y equipo de oficina o el comercio al por menor realizado a través de internet asumieron tasas efectivas cercanas al 30 %. Esta variabilidad resalta la necesidad de revisar las políticas fiscales para asegurar una distribución equitativa de la carga tributaria y una asignación eficiente de recursos.
Do bigger firms pay lower corporate tax in Colombia?
(With Liliana Heredia, Gabriel Millán, Angie Nieto, Lucia Salamanca and Mauricio Salazar, Working Paper)
This study provides robust evidence that larger firms in Colombia systematically pay lower corporate taxes as a share of their profits. Using administrative data from the Colombian National Tax Authority (DIAN), we find that larger firms consistently face a lower Effective Tax Rate (ETR) under the Corporate Income Tax (CIT). Firm size is proxied by two measures: total assets and gross income. Our analysis shows that a 1\% increase in gross income is associated with a reduction in the ETR of approximately 0.9 percentage points, while a 1\% increase in total assets is linked to a 1.5 percentage points decrease in the ETR.
Mandatory retirement savings in the presence of an informal labor market
(Journal of Population Economics, 2023 Jul 27:1-32)
This paper shows how mandating workers to save more for retirement can lead them to work informally and save less. Consider a worker who is more productive in the formal sector but works informally to avoid mandatory retirement contributions. Lowering the contribution rate (the share of wages mandated to be saved) will paradoxically increase her retirement savings. The reason for this is that working informally acts as borrowing against mandatory savings. The implicit cost of such borrowing, and hence the opportunity cost of working informally, rises as the contribution rate drops. This creates a substitution effect favoring formal work, driving the worker towards the formal sector. As her formal income increases, the base for her mandatory contributions rises, expanding her retirement savings. Therefore, the optimal contribution rate is no greater than the highest contribution rate under which the worker prefers to work exclusively in the formal sector.
On the efficiency of mandatory retirement savings under endogenous borrowing constraints
Mandatory contributions to retirement saving accounts may tighten existing borrowing constraints, forcing individuals to forgo profitable investment options. This welfare-detrimental effect can be offset if retirement savings are allowed to serve as collateral. Moreover, some credit market imperfections may disappear altogether if this later policy is combined with a pension system with unconditional basic savings.
Uneven gains: The macroeconomic and welfare effects of the business tax reform
This paper assesses the macroeconomic and welfare effects of the 2017 U.S. tax reform. This assessment is carried out by simulating the enacted business tax cuts in a dynamic general equilibrium model calibrated to replicate the household income distribution in the U.S. The simulation suggests that the cuts will lead to increases in investment, wages and output, although the welfare gains are quite unevenly distributed across households. Despite the aggregate net gains for the economy, households at the bottom of the income distribution are going to be worse-off unless the spending cuts necessary to balance the federal budget are targeted at households at the top of the income distribution.
A note on “Evolution of Preferences”
Journal of Mathematical Economics, August 2017.
A surprising result in Dekel et al. (2007) states that strict Nash equilibria might cease to be evolutionary stable when agents are able to observe a signal that fully reveals the opponent’s preferences, even if the frequency of the signal is very low. I show that when the signal a player receives on her opponent’s preferences is almost uninformative, all strict Nash equilibria are evolutionary stable, no matter the frequency of the signal.
Asset value and securitization under heterogeneous beliefs
This paper studies the effect of securitization on asset pricing when agents have heterogeneous beliefs about the stochastic process on dividends, prices and interest rates. For this purpose, the asset pricing model of Harrison and Kreps (1978) is modified to account for the possibility for agents to issue asset backed securities. The securities are constrained to belong to tranches of different payment priority, mimicking collateralized debt obligations (CDO). Securitization weakly increases the gap between the price of an underlying asset and any perceived present value of its dividends. A necessary condition for this increase to be strict is the absence of beliefs regarding the next-period price of the underlying asset which first-order stochastically dominate all others beliefs. In states of the world where investors with divergent beliefs buy securities from different tranches, the underlying asset is traded at a price higher than what anyone thinks it is worth. Since securities with a return below the market interest rate may be traded across agents, securitization has mixed effects on portfolio returns. In cases where there is a type of agent more sophisticated than all others, securitization can weakly decrease the returns all agents receive.
More than an Urban Legend: The short- and long-run effects of unplanned fertility shocks
with Thiemo Fetzer and Amar Shanghavi. Journal of Population Economics, October 2018.
This paper exploits an extensive period of power rationing in Colombia, lasting for most of 1992, to shed light on three interrelated questions. First, we show that temporary shocks can induce changes in fertility, causing mini baby booms. Second, we show that the temporary shock has a persistent effect on overall fertility. Third, we present evidence suggesting that the temporary shock to fertility cause worse socioeconomic outcomes for mothers 12 years later. Taken together, the results suggest that there are large indirect social costs to poor public infrastructure.
Innovative Elites and Technology Diffusion
This paper studies the effect of lags in technology diffusion on the growth process and the distribution of income. An overlapping generations model with heterogeneous agents is constructed with this purpose. Agents are distributed in a rectangular grid where they are able to observe and copy the technology of their neighbors. The potential GDP growth of the whole economy is driven by those agents who have the highest propensity to innovate. Therefore, the growth rate is a function of the characteristics of an innovative elite, instead of being a function of some average characteristics of the whole population. The closer you are to an agent who belongs to that elite, the more likely is that you have a relatively high level of income, given the possibility of free-ride on his ideas. Because of the possible dispersion of the innovative elite across the grid, this could lead to multimodal distributions of income. Therefore, the model sets an alternative hypothesis to explain the spatial distribution of income across regions and countries.
Matrices de Contabilidad Social 2003, 2004 y 2005 para Colombia
(con Diego Corredor. Archivos de Economía No. 339, Departamento Nacional de Planeación, Febrero 2008)
En este manual se presentan los procedimientos para la construcción de las Matrices de Contabilidad Social para los años 2003, 2004 y 2005. Su objetivo es poner a disposición de las personas o instituciones que utilizan las matrices como insumo en sus investigaciones, todos los recursos necesarios para su elaboración o modificación. Para cada año, se construyen dos matrices. En la primera, se resume en un solo arreglo la información de las Cuentas Nacionales del DANE. En la segunda, el ingreso laboral es desagregado en 6 tipos de trabajo y los hogares son desagregados en deciles de ingreso. La fuente de información utilizada para la desagregación es la Encuesta de Calidad de Vida del 2003.
Descargar Matrices de Contabilidad Social: SAMS.zip
Increasing returns in human capital accumulation and public funding of education
(2007 LACEA and LAMES meeting, Bogotá Colombia, October 2007)
This paper evaluates the effect of public funding of education on economic growth when human capital accumulation exhibits increasing social returns. An extension of the Azariadis and Drazen (1990) model is constructed for this purpose. With increasing returns on human capital, the long-run growth rate for the economy depends on factor endowments: if human and physical capital are below (above) a certain threshold, the economy tends towards a low (high) growth rate. Public funding of education can help to escape from the low growth trap, but the lower the level of factor endowments, the greater the public funding needed for this goal. Moreover, there could be no level of public spending on education that can achieve this result if the economy is extremely poor.
A dynamic general equilibrium model to evaluate income tax reforms in Colombia
(ECLAC XIX Regional Seminar on Fiscal Policy, Santiago de Chile, February 2007)
This paper presents a dynamic general equilibrium model designed to evaluate the effect of income tax reforms on efficiency, welfare and economic performance. Agents are classified by their years of schooling and their years of working experience, which in turn determine their labor productivity. Their decisions over asset accumulation, consumption and labor supply are affected by the taxes. The parameters of the model are estimated and calibrated to reflect some characteristics of the Colombian economy and its income tax structure. In order to provide a numerical example of the model, the original 2006 tax reform proposed by the government is simulated. Quantitative responses of some aggregates and welfare indicators are obtained, both in the steady state and during the transition.
MATLAB source code: Download ZIP file
(Revista ESPE, número 52, diciembre 2006)
This paper studies the effect of public financing of education on economic growth and welfare. It develops an overlapping generations model with endogenous growth where agents educate themselves to accumulate human capital and the government subsidizes a fraction of education expenditure. Parameters are calibrated to replicate some stylized facts of the Colombian economy. Simulations suggest that an increase in public expenditure on education of 1 percentage point of the GDP leads to an increase of 0.14 percentage points in the long run economic growth rate.
MATLAB source code: Download RAR file