Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/89166
Authors: 
Galindo, Arturo
Melendez, Marcela
Year of Publication: 
2010
Series/Report no.: 
IDB Working Paper Series IDB-WP-173
Abstract: 
This paper uses a yearly dataset of plant-level investment in Colombian firms during the period 1997 to 2007 to assess the impact of a tax incentive for firms that invest in fixed assets implemented in 2004. A positive and statistically significant correlation is found between the boom observed in investment and the adoption of the tax policy. However, the correlation vanishes when year-specific effects are controlled for. This result is robust to changes in the empirical specification, changes in estimation techniques, the inclusion of additional controls, and changes in the data set, among other tests. Overall, it is concluded that the tax stimulus analyzed was ineffective in promoting investment in Colombia.
Subjects: 
Taxes
Investment
Colombia
JEL: 
E22
H2
O54
Document Type: 
Working Paper

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