New Economics Papers
on Central and South America
Issue of 2005‒09‒29
six papers chosen by

  1. Public Pensions and Capital Accumulation: The Case of Brazil By Gerhard Glomm; Jürgen Jung; Changmin Lee; Chung Tran
  2. Race and Ethnic Inequality in Health and Health Care in Colombia By Raquel Bernal; Mauricio Cárdenas
  3. Capital Flows and Controls in Brazil: What Have We Learned? By Ilan Goldfajn; André Minella
  4. Flexible Exchange Rates as Shock Absorbers By Sebastian Edwards; Eduardo Levy Yeyati
  5. Managing Systemic Liquidity Risk in Financially Dollarized Economy By Alain Ize; Miguel Kiguel; Eduardo Levy Yeyati
  6. Productivity Growth and the Exchange Rate Regime: The Role of Financial Development By Philippe Aghion; Philippe Bacchetta; Romain Rancière; Kenneth Rogoff

  1. By: Gerhard Glomm; Jürgen Jung; Changmin Lee; Chung Tran
    Abstract: We use an OLG model to study the effects of the generous public sector pension system in Brazil. In our model there are two types of workers, one working in the private sector, the other working in the public sector. Public workers produce infrastructure or education services. We find that reducing generosity of the public sector pensions has large effects on capital accumulation and steady state income.
    Keywords: pension reform, capital accumulation
    JEL: E62 H41 H55
    Date: 2005
  2. By: Raquel Bernal; Mauricio Cárdenas
    Abstract: Abstract: In this paper we explore race and ethnic health inequalities in Colombia. We first characterize the situation of Afro-Colombians and indigenous populations in Colombia. Second, we document racial/ethnic disparities in health outcomes and access to health care using data from the Living Standards Survey and the evaluation of the Familias en Acción program. Third, we set up a statistical model that allows us to test whether some of the health inequalities that are observed still remain after controlling for a wide range of individual and household observed characteristics, including access to health care. The results indicate that most racial and ethnic disparities in health and access to health care disappear once we control for socioeconomic characteristics of individuals, employment status and characteristics of the job and geographic location among other things. Based on these findings we make some specific policy recommendations aimed at improving the status of racial minorities in Colombia.
    Keywords: Salud
    JEL: H11
    Date: 2005–01–03
  3. By: Ilan Goldfajn; André Minella
    Abstract: This paper analyzes the relationship between capital account liberalization and macroeconomic volatility using Brazil as a case study. The paper provides several stylized facts regarding the evolution of capital flows and controls in Brazil in the last three decades. We conclude that, notwithstanding the financial crises and macroeconomic volatility of the recent past, capital account liberalization and the floating exchange regime have led to a more resilient economy. Further liberalization of the capital account is warranted and should be accompanied by a broad range of reforms to improve and foster stronger institutions.
    JEL: F21 F32 F40
    Date: 2005–09
  4. By: Sebastian Edwards; Eduardo Levy Yeyati
    Abstract: This paper studies how institutional factors and systemic risks (driven by macroeconomic conditions) prevalent in emerging economies may impact market discipline among banks (traditionally understood as market responses to bank fundamentals). First, we discuss how certain institutional features of emerging economies (underdeveloped capital markets, pervasive government ownership of banks, greater guarantees, inadequate disclosure and transparency) may affect market responses to bank risk. Second, using the recent Argentine crisis as an illustration, we argue that systemic risks may exert an overwhelming impact on market behavior, overshadowing the link between the latter and bank fundamentals. Thus, market discipline, while missing in the traditional sense, may be indeed quite robust once systemic risks are factored in. We conclude that in emerging economies the analysis of market discipline should take into account the importance of institutional and systemic factors.
    Date: 2004
  5. By: Alain Ize; Miguel Kiguel; Eduardo Levy Yeyati
    Abstract: This paper evaluates ways to protect highly dollarized banking systems from systemic liquidity runs (such as the ones that took place recently in Argentina, Uruguay, and Paraguay). In view of the limitations of available (private or official) insurance schemes, and the distortions introduced by central bank lending of last resort (LOLR), the authors favor decentralized liquid foreign asset requirements on dollar deposits, supplemented by a scheme of “circuit breakers.” The latter combines the use of limited dollar liquidity to ensure the convertibility of transactional deposits with a mechanism that automatically limits the convertibility of dollar term deposits once triggered by a predetermined decline in banks’ liquidity.
    Date: 2005
  6. By: Philippe Aghion; Philippe Bacchetta; Romain Rancière; Kenneth Rogoff
    Abstract: This paper offers empirical evidence that a country's choice of exchange rate regime can have a signifficant impact on its medium-term rate of productivity growth. Moreover, the impact depends critically on the country's level of financial development, its degree of market regulation, and its distance from the global technology frontier. We illustrate how each of these channels may operate in a simple stylized growth model in which real exchange rate uncertainty exacerbates the negative investment e¤ects of domestic credit market constraints. The empirical analysis is based on an 83 country data set spanning the years 1960-2000. Our approach delivers results that are in striking contrast to the vast existing empirical exchange rate literature, which largely finds the effects of exchange rate volatility on real activity to be relatively small and insignificant.
    Keywords: Productivity growth; exchange rate
    JEL: O42 F30 F31 F43
    Date: 2005–05

General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.