Date of Award

Spring 5-1-2026

Document Type

Thesis

Degree Name

Bachelor of Arts (BA)

Department

Economics

First Advisor

Monica Das

Abstract

This study estimates the effect of the Municipalities Most Affected by the Armed Conflict Policy (ZOMAC) on formal construction investment in Colombia using an unbalanced municipality-month panel derived from the DANE Construction Statistics: Building Permits (ELIC) dataset, covering January 2005 to November 2025. A multi-period difference-in-differences approach, using the Callaway and Sant’Anna estimator, is implemented to evaluate the impact of ZOMAC on the beneficiary municipalities relative to the municipalities never treated. Rather than providing descriptive accounts of post-conflict policy, this investigation assesses the effectiveness of a place-based tax incentive in promoting formal investment in the municipalities historically affected by conflict. The findings show that the ZOMAC implementation produced an average treatment effect on the treated of 0.345 log points, equivalent to an approximate 41 percent increase in approved construction area in the treated municipalities relative to never-treated counterparts. Formal pre-treatment tests and graphical evidence reinforce the credibility of the identification strategy by showing that there were no systematic differences or effects unrelated to the policy before it was implemented. While ZOMAC increased formal construction investment in treated municipalities, part of the estimated effect may reflect spatial reallocation of projects or changes in how permits are processed.

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