Exogenous Shocks and Fiscal Policy in a Dynamic Stochastic General Equilibrium (DSGE) Model: The Case of an Emergent Economy [Choques exógenos y política fiscal en un modelo de Equilibrio General Dinámico Estocástico (DSGE): Una aplicación para una economía emergente]

A Dynamic Stochastic General Equilibrium (DSGE) model is used to evaluate the effect of supply (productivity) and demand (foreign trade) shocks on the economy. In addition, the policy impact of public spending under a given economic environment is analyzed. Our results show that, for an open economy (as Colombia), an expansionary policy of public spending increases employment and production in the short run, but carries an future cost, which appears to be greater than the short term benefit. © Revista de Economía del Rosario.

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