Search

Fiscal credibility plays an important role in creating favorable scenarios for investment and economic growth. Adequate management of public finances can be decisive in the perception of country risk and the attraction of foreign capital. The aim of this paper is to build a fiscal credibility index and evaluate its impact on investment expectations in Colombia for the 2005-2019 period. Using monthly data on fiscal credibility, investment expectations, and a set of control variables, estimates were made using OLS and GMM methods. Robustness tests were performed using impulse-response functions. The findings reveal that fiscal credibility directly influences the investment decisions of private agents, and that local interest rates and international volatility negatively affect investors' expectations. [ABSTRACT FROM AUTHOR]

The purpose of this research is to analyze the effects and risks of the application of the most-favored nation (MFN clause), which allows investors to benefit from guarantees, which were not initially included in a bilateral investment treaty. In particular, this work will demonstrate that the effects of this clause depend on the exclusions made in the wording of the MFN clause, and that having more detailed conditions can result in a more efficient guarantee of legal certainty, since it prevents an arbitration tribunal from expanding the effects of the clause beyond what States would desire. To further develop this concept, the paper first puts the situation of foreign investment and bilateral investment treaties in Colombia into context, a conceptual review of the MFN clause is made, various decisions by the International Centre for Settlement of Investment Disputes (ICSID) arbitral tribunals are analyzed and specific clauses of bilateral investment treaties (BITs) signed by Colombia are studied, focusing on treaties with the United States and Switzerland. [ABSTRACT FROM AUTHOR]