New Economics Papers
on Central and South America
Issue of 2005‒02‒06
four papers chosen by

  1. Toward a Modern State in Chile: Institutions, Governance, and Market Regulation. By Eduardo Saavedra; Raimundo Soto
  2. The Political Economy of Health Services Provision and Access in Brazil By Ahmed Mushfiq Mobarak; Andrew Sunil Rajkumar; Maureen L. Cropper
  3. Core Inflation and Inflation Targeting in a Developing Economy By Luis A. Rivas
  4. A Pro-Market Agenda for El Salvador By Eduardo Engel

  1. By: Eduardo Saavedra (ILADES-Georgetown University, Universidad Alberto Hurtado); Raimundo Soto (Departamento de Economía, Pontificia Universidad Católica de Chile)
    Abstract: Chile, as most Latin American countries, inherited the language, religion, and the institutions from 16th century Spanish conquerors. Most institutions have not changed since. This paper examines the institutional and economic structure of the State in Chile. It concludes that in several dimensions the current structure is incompatible with an adequate functioning of market economies, as those intended by the economic reforms implemented during the last three decades of the last century. The country needs to implement reforms in the administration of the State, the working of the Judiciary system, and the incentives and operation of regulatory agencies. Their combined negative effects imply that the benefits of reforms, privatization and market liberalization are partially dissipated in the form of inefficiency and rent seeking behaviour. In turn, this suggest that it is unlikely that the Chilean economy will reach the high growth rates necessary to overcome under development. Our main conclusion is that, in order to implement a framework in which the State acts mainly as regulator and competition supporter, it is necessary to undertake profound changes in the structure of incentives in which it currently operates. Five elements are at the center of this far-reaching evolution away from centralism, stagnation, and inefficiency: (1) the divestiture of state-owned enterprises, (2) the upgrade and update of regulatory agencies and the institutional framework in which they operate, (3) the improve of competition policy institutions, (4) the improvement of consumer rights protection, and (5) a substantial improvement in the working of the Judiciary system.
    Keywords: Modernization, Institutions, Regulation, Governance
    JEL: H11 K21 K23 L51 L97
    Date: 2004–12
  2. By: Ahmed Mushfiq Mobarak; Andrew Sunil Rajkumar; Maureen L. Cropper
    Abstract: Mobarak, Rajkumar, and Cropper examine the impact of local politics and government structure on the allocation of publicly subsidized (SUS) health services across municipios (counties) in Brazil, and on the probability that uninsured individuals who require medical attention actually receive access to those health services. Using data from the 1998 PNAD survey they demonstrate that higher per capita levels of SUS doctors, nurses, and clinic rooms increase the probability that an uninsured individual gains access to health services when he or she seeks it. The authors find that an increase in income inequality, an increase in the percentage of the population that votes, and an increase in the percentage of votes going to left-leaning candidates are each associated with higher levels of public health services. The per capita provision of doctors, nurses, and clinics is also greater in counties with a popular local leader and in counties where the county mayor and state governor are politically aligned. Administrative decentralization of health services to the county decreases provision levels and reduces access to services by the uninsured unless it is accompanied by good local governance. This paper is a product of the Infrastructure and Environment Team, Development Research Group.
    Keywords: Health & Population; Public Sector Management
    Date: 2005–02–02
  3. By: Luis A. Rivas (Department of Economics, Vanderbilt University and Banco Central de Nicaragua)
    Abstract: This paper is concerned with inflation targeting as a potential monetary policy objective in a developing economy. Using data from Nicaragua, it first studies the extent to which the Consumer Price Index (CPI) could be used to formulate short-run inflation targets. It is found that due to the particular cross-sectional properties of the relative-price distributions, the rate of change in the CPI may not be the best index for this purpose. As a consequence, the paper is also concerned with the choice of alternative indicators of inflation and their statistical properties. These alternative measures are ranked according to their ability to forecast the rate of change in the price level. Finally, the relationship between the dispersion and skewness of the relative-price distribution and generalized inflation is studied using time series analysis.
    Keywords: Core inflation, developing economies, forecasting, monetary policy, price index, tiem-series
    JEL: C22 C43 E31 E37 E52 O23 O54
    Date: 2003–05
  4. By: Eduardo Engel (
    Abstract: This paper argues that, despite important productivity gains, reforms have benefited consumers much less than expected in El Salvador. Antitrust legislation, consumer protection and an adequate regulation of privatized utilities are central ingredients of a successful market economy. Major reforms that are needed in each one of these areas in El Salvador are described.
    Keywords: Market reform, Antitrust legislation, Consumer protection, Privatization, Regulation of utilities
    JEL: D18 L40 L51 L94 L96 O12
    Date: 2005–01

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