Intro -- Contents -- I. INTRODUCTION AND OVERVIEW -- II. A BRIEF REVIEW OF MACROECONOMIC DEVELOPMENTS SINCE THE EARLY 1990S -- III. THE DATA -- IV. SECTORAL BALANCE SHEETS AND THEIR INTERACTIONS -- V. CONCLUSIONS -- References -- Appendix I: Balance Sheet Matrices for 1996, 1998, 1999, 2000,...

In this paper, we show that a reduction in capital goods prices induced by trade policies can stimulate both investment and labor. We exploit a quasi-natural experiment in the form of a trade reform in Colombia to study how firms with differential exposure to reductions in capital goods tariffs...