THE BUSINESS CYCLE IN COLOMBIA: THE ROLE OF THE STABILIZATION POLICY

Abstract

This document measures the synchronization between the stabilization policy and the Colombian business cycle during the period March 1990 – June 2013. A classical methodology is used for the cycle construction and a reference cycle is constructed parting from three individual cycles of three real economic activity indicators. With the end of measuring the synchronization between the business cycle and the fiscal and monetary policy, the Harding and Pagan statistical analysis (2006) is used. It is concluded that for the period of time studied the stabilization policies tend to be pro-cyclic (for the fiscal case) and counter-cyclic (for the monetary case). This phenomenon is known in literature as when it rains, it pours and it is common to see in economies such as the Colombian.