IESET.
Hypotheses·fiscal·bukele_fiscal_trajectory_tax_cuts_imf_2019_2024

El Salvador's fiscal trajectory under Bukele (2019-2024) shows improvement in the primary balance and stabilisation (or modest decline) in debt-to-GDP after the 2020 COVID spike, achieved via a combination of: (a) the 2022-2023 bond buyback / liability-management operations, (b) the 2023 tax reform (lower rates with base-broadening and improved compliance), and (c) IMF-signalled fiscal consolidation culminating in the Dec 2024 $1.4bn Extended Fund Facility.

The pre-registered claim is that under a panel decomposition framework, Salvadoran primary balance improvement 2022-2024 exceeds the Central American peer-group average by at least 1.5 percentage points of GDP, and that the dominant channel is spending compression + debt-service reduction via liability management, not a revenue-side tax-rise (i.e., the Laffer-style lower-rate / broader-base conjecture).

PARTIALengine/runs/bukele_fiscal_trajectory_tax_cuts_imf_2019_2024

PARTIAL — coef=-1.313, p=0.293 (above α=0.05); direction inconclusive

confidence cueThe result is useful, but not decisive. Treat it as a clue, not a settled conclusion.

policy briefMixed or noisy

In ordinary language

In plain terms, this asks whether bukele era indicator is actually linked to better or worse primary balance income from 2010 to 2025.

plain answer

The evidence is suggestive but not decisive. coef=-1.313, p=0.293 (above α=0.05); direction inconclusive

why it matters

This matters because fiscal claims should change belief only when they survive a pre-declared empirical test.

how the test works

It compares 7 country or place units from 2010 to 2025, using a panel fe decomposition design, with fixed effects for country and year.

what was measured
What changed
  • Bukele era indicator
  • Bond buyback active
Possible pathway
  • Revenue income
  • Expenditure income
What we checked
  • Primary balance income
  • General government debt income
  • Interest expenditure income
what this does not prove

A single test is not the whole truth. It narrows the claim under a specific sample, time period, and method. Strong policy conclusions need the pattern to survive nearby tests, alternative data, and serious objections.

verification

0 input datasets, 0 unresolved missing series, provenance status: no input vintages recorded.

Results

engine/runs/bukele_fiscal_trajectory_tax_cuts_imf_2019_2024
1007550250201020182025SLVHNDGTMNICCRIPANDOM
illustrative sketch · run pending
No coefficients yet. When the model fires, this chart will show primary_balance_gdp across 7 sampled countries over 2010–2025.
The shapes above are stylised — none of the lines are real data.
Placeholder for bukele_fiscal_trajectory_tax_cuts_imf_2019_2024. Published chart will be generated from engine/runs/bukele_fiscal_trajectory_tax_cuts_imf_2019_2024/chart_data.json.

Who has skin in the game — schools predicting on this

17 schools list this hypothesis as a test of their position. The chips below are school-level scoreboard outcomes, not a second hypothesis verdict.

hypothesis verdict vs scoreboard outcome

The banner verdict judges this hypothesis as written. The scoreboard asks whether each school's polarity-corrected prediction was right. Raw status is not a school win: SUPPORTED supports schools that needed SUPPORTED, but refutes schools that needed REFUTED.

Austrian Business Cycle Theory (ABCT)wins if SUPPORTEDpartial/no-callChicago School Monetarismwins if SUPPORTEDpartial/no-callClassical Liberalwins if SUPPORTEDpartial/no-callDegrowth / Ecological Macroeconomicswins if REFUTEDpartial/no-callDemocratic Socialism (Bernsteinian revisionism + modern)wins if REFUTEDpartial/no-callStructuralist / Developmentalistwins if MIXEDpartial/no-callEco-Socialism / Red-Greenwins if REFUTEDpartial/no-callEmpirical Pragmatist (the framework's house position)wins if MIXEDpartial/no-callNew Institutional Economicswins if MIXEDpartial/no-callMarket Socialism (Lange-Lerner tradition)wins if REFUTEDpartial/no-callMarxian Political Economywins if REFUTEDpartial/no-callMarxism-Leninism (central-planning implementation)wins if REFUTEDpartial/no-callModern Monetary Theorywins if REFUTEDpartial/no-callNew Keynesian (mainstream synthesis)wins if MIXEDpartial/no-callOrdoliberalism (Freiburg School)wins if SUPPORTEDpartial/no-callPost-Keynesianwins if REFUTEDpartial/no-callSocial Democraticwins if REFUTEDpartial/no-call

Pre-registration

registration ordering unverified
first-spec commit 4c8ce8e · 2026-07-18T22:11:21Z
run generated · 2026-06-29T17:52:12Z
Run timestamp predates this path's first git-add commit (rebase, rename, or pre-git local run). Spec hash is still the path's first-add commit — not repository HEAD — but ordering is not a clean pre-registration proof.

El Salvador's fiscal trajectory under Bukele (2019-2024) shows improvement in the primary balance and stabilisation (or modest decline) in debt-to-GDP after the 2020 COVID spike, achieved via a combination of: (a) the 2022-2023 bond buyback / liability-management operations, (b) the 2023 tax reform (lower rates with base-broadening and improved compliance), and (c) IMF-signalled fiscal consolidation culminating in the Dec 2024 $1.4bn Extended Fund Facility. The pre-registered claim is that under a panel decomposition framework, Salvadoran primary balance improvement 2022-2024 exceeds the Central American peer-group average by at least 1.5 percentage points of GDP, and that the dominant channel is spending compression + debt-service reduction via liability management, not a revenue-side tax-rise (i.e., the Laffer-style lower-rate / broader-base conjecture).

Falsification criterion — what would disprove this

set before the run · honoured after

This hypothesis is considered falsified if:

Not supported if any of: (a) the panel-FE coefficient on the Bukele-era indicator for primary_balance_gdp is not positive and significant at 5%, OR (b) the coefficient on general_government_debt_gdp is positive and significant at 5% (i.e., debt ratio rose rather than stabilised/fell), OR (c) the primary-balance improvement versus peer-group average over 2022-2024 is less than 1.5 percentage points of GDP, OR (d) the decomposition shows the dominant positive channel is revenue-side with expenditure compression accounting for less than 40% of the primary-balance improvement (this would refute the spending-compression/liability-management story in favour of a tax-rise story inconsistent with the stated reform content).

formal test & threshold
test:      panel_fe_plus_decomposition_plus_peer_gap
threshold: panel_FE_beta(bukele_era, primary_balance) > 0 at p<0.05 AND panel_FE_beta(bukele_era, debt_gdp) < 0 at p<0.05 AND (primary_balance_SLV_2022_2024_mean - primary_balance_peers_2022_2024_mean) > 1.5 percentage points GDP AND expenditure_channel_share_of_improvement >= 0.40

Method

Template
panel_fe_decomposition
Fixed effects
country, year
Clustering
country
Sample
7 countries · 2010 – 2025
Evidence type
causal

Primary: two-way FE panel with SLV as treated from 2019Q2, Central American peers as never-treated control; outcome is primary balance and debt/GDP. Decomposition: separately regress revenue_gdp, expenditure_gdp, and interest_gdp on the Bukele-era indicator and sub-treatment binaries (buyback, tax reform) to isolate which channel explains the primary- balance change. Secondary: synth_did with peer donor pool as robustness.

Data

VariableSourceTransform
primary_balance_gdp
outcome
world_bank_wdi:GC.NLD.TOTL.GD.ZStier 2
level
general_government_debt_gdp
outcome
imf:GGXWDG_NGDPtier 2
level
interest_expenditure_gdp
outcome
imf:GGXCNL_NGDPtier 2
world_bank_wdi:GC.XPN.INTP.ZStier 2
level
bukele_era_indicator
treatment
constructed:binary = 1 for SLV from 2019-06-01 onward; 0 otherwisetier 5
binary
bond_buyback_active
treatment
constructed:binary = 1 for SLV from 2022-09-01 onwardtier 5
binary
tax_reform_active
treatment
constructed:binary = 1 for SLV from 2023-10-01 onwardtier 5
binary
revenue_gdp
channel
world_bank_wdi:GC.REV.XGRT.GD.ZStier 2
level
expenditure_gdp
channel
world_bank_wdi:GC.XPN.TOTL.GD.ZStier 2
level
interest_expenditure_gdp
channel
imf:GGXCNL_NGDPtier 2
level
real_gdp_growth
control
world_bank_wdi:NY.GDP.MKTP.KD.ZGtier 2
level
commodity_terms_of_trade
control
world_bank_wdi:TT.PRI.MRCH.XD.WDtier 2
level
us_policy_rate
control
fred:FEDFUNDStier 1
level
sovereign_yield_spread
control
jp_morgan_embi:EMBItier 2
bloomberg_sov:SLVtier 2
level

● ready  · ● pending  · ● reconstruct-needed

Detailed result card

Result card — bukele_fiscal_trajectory_tax_cuts_imf_2019_2024

Verdict: PARTIAL — coef=-1.313, p=0.293 (above α=0.05); direction inconclusive

Pre-registration

  • Claim: El Salvador's fiscal trajectory under Bukele (2019-2024) shows improvement in the primary balance and stabilisation (or modest decline) in debt-to-GDP after the 2020 COVID spike, achieved via a combination of: (a) the 2022-2023 bond buyback / liability-management operations, (b) the 2023 tax reform (lower rates with base-broadening and improved compliance), and (c) IMF-signalled fiscal consolidation culminating in the Dec 2024 $1.4bn Extended Fund Facility. The pre-registered claim is that under a panel decomposition framework, Salvadoran primary balance improvement 2022-2024 exceeds the Central American peer-group average by at least 1.5 percentage points of GDP, and that the dominant channel is spending compression + debt-service reduction via liability management, not a revenue-side tax-rise (i.e., the Laffer-style lower-rate / broader-base conjecture).
  • Falsification rule: Not supported if any of: (a) the panel-FE coefficient on the Bukele-era indicator for primary_balance_gdp is not positive and significant at 5%, OR (b) the coefficient on general_government_debt_gdp is positive and significant at 5% (i.e., debt ratio rose rather than stabilised/fell), OR (c) the primary-balance improvement versus peer-group average over 2022-2024 is less than 1.5 percentage points of GDP, OR (d) the decomposition shows the dominant positive channel is revenue-side with expenditure compression accounting for less than 40% of the primary-balance improvement (this would refute the spending-compression/liability-management story in favour of a tax-rise story inconsistent with the stated reform content).
  • Falsification test: panel_fe_plus_decomposition_plus_peer_gap

Estimate

  • Method: linearmodels.PanelOLS
  • Coefficient (treatment): -1.313
  • Std error: 1.236
  • p-value: 0.293
  • Observations: 81, countries: 7
  • Within R²: 0.683
  • Fixed effects: entity=True, time=True
  • Clustering: country

Variables resolved

  • world_bank_wdi:GC.NLD.TOTL.GD.ZS) → primary_balance_gdp (outcome, publisher=world_bank_wdi, n=5147)
  • imf:GGXWDG_NGDP → general_government_debt_gdp (outcome, publisher=imf, n=8113)
  • imf:GGXCNL_NGDP; world_bank_wdi:GC.XPN.INTP.ZS → interest_expenditure_gdp (outcome, publisher=imf, n=8848)
  • constructed: binary = 1 for SLV from 2019-06-01 onward; 0 otherwise → bukele_era_indicator (treatment, publisher=constructed, n=112)
  • constructed: binary = 1 for SLV from 2022-09-01 onward → bond_buyback_active (treatment, publisher=constructed, n=112)
  • constructed: binary = 1 for SLV from 2023-10-01 onward → tax_reform_active (treatment, publisher=constructed, n=112)
  • world_bank_wdi:GC.REV.XGRT.GD.ZS → revenue_gdp (decomposition_channels, publisher=world_bank_wdi, n=1460)
  • world_bank_wdi:GC.XPN.TOTL.GD.ZS → expenditure_gdp (decomposition_channels, publisher=world_bank_wdi, n=5156)
  • imf:GGXCNL_NGDP → interest_expenditure_gdp (decomposition_channels, publisher=imf, n=8848)
  • world_bank_wdi:NY.GDP.MKTP.KD.ZG → real_gdp_growth (controls, publisher=world_bank_wdi, n=13897)
  • world_bank_wdi:TT.PRI.MRCH.XD.WD → commodity_terms_of_trade (controls, publisher=world_bank_wdi, n=6478)
  • fred:FEDFUNDS → us_policy_rate (controls, publisher=fred, n=511)

Variables missing data

  • jp_morgan_embi:EMBI+; bloomberg_sov:SLV (controls, name=sovereign_yield_spread) — vintage not on disk

Generated by scripts/run_panel_fe.py at 2026-06-29T17:52:12+00:00

Strongest opposing argument

Every hypothesis ships with its charitable opposing argument. The framework earns credibility by handling objections at their strongest, not weakest.

Notes

Data-gated on IMF GFS series for El Salvador and peers (annual general-government fiscal aggregates) plus EMBI+ spread series for market-perception controls. The decomposition test is the load-bearing falsification criterion — the literature is mixed on which channel dominates Latin American fiscal adjustments of this size.

Authored framework. Read the transparency note.