The Political Economy of Macroeconomic Policy Reform in Latin America The Distributive and Institutional Context
The Distributive and Institutional Context
Chapter 6: Colombia: Fairness Perception and the Political Tolerance for Macroeconomic Policy Reform
6. Colombia: fairness perception and the political tolerance for macroeconomic policy reform Constitutional rules appear to shape economic policy and largely determine economic performance. Persson and Tabellini (2004a, p. 94) I. THE PRIMACY OF CONSTITUTIONAL RULES Colombia seems to be the typical case in which Constitutional rules determine economic policies and the politics of those policies (Persson and Tabellini, 2003; Acemoglu, 2005b, p. 1025).1 In eﬀect, no other set of factors better explains this country’s economic, political and social developments over the last ﬁfteen years2 than the rules that emanated from its 1991 Constitution and from the basic conceptual and philosophical perspective under which it was framed. This is the ‘ﬁrst-order-context-necessarycondition’ to avoid excessive and unnecessary focus on particular or speciﬁc episodes thus running the risk of missing the structural nature of the problems at hand. In brief, understanding Colombia’s recent macroeconomic performance, in terms of growth, inﬂation, volatility and distributional outcomes, requires careful consideration of its ab initio ‘Constitutional normative philosophy’ and delving into at least the following two 1991 constitutional mandates: Articles 356 and 357 established a formula driven transfers3 system which more than doubled the revenue transfers from the national level to the subnational level, to the states, to municipalities4 and to some sectors. ii. Articles 371, 372 and 373 mandated the creation of an autonomous Central Bank with the instruction to lower inﬂation and to maintain price stability in coordination5 with the general social and economic policies of the government.6 i....
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