| Sumario: | The purpose of this study is to verify the empirical relationship between the instruments of fiscal policy and different macroeconomic variables such as savings, investment, and employment for the period 1970-2011. The crucial role of investment when it equals saving, permits an increase in output, fostering employment. Savings and investment are analyzed through an econometric model using seven equations that show the possible causal relationships. They also consider dummy variables to introduce the effect of the different fiscal reforms on savings in Colombia. The results demonstrate that there is no significant relationship between fiscal policy and savings and employment levels in Colombia. With respect to the different components of internal savings, in both the public and private sectors, a possible “expulsion effect” was observed.
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