New Economics Papers
on Central and South America
Issue of 2005‒11‒12
seven papers chosen by

  1. El Costo de los Ciclos Económicos en Colombia: Una Nueva Estimación By Mauricio A. Hernández; Munir A. Jalil; Carlos Esteban Posada
  2. Foreign and Domestic Firms in Colombia:Development and Trends 1996-2003 By Peter Rowland
  3. Valuation of Debt Indexed to Real Values I. The case of the Argentinean Growth Coupon: a Simple Mode By Sergio Pernice; Federico López Fagundez
  4. Is there a Role for Private Health Insurance in Developing Countries? By Denis Drechsler; Johannes Jütting
  5. The Impact of Brazil´s Tax-Benefit System on Inequality and Poverty By Herwig Immervoll; Horacio Levy; José Ricardo Nogueira; Cathal O´Donoghue; Rozane Bezerra de Siqueira
  6. Race Discrimination or Inequality of Opportunities: The Brazilian Case By Philippe G. Leite
  7. Fostering Innovation in Chile By José-Miguel Benavente; Luiz de Mello; Nanno Mulder

  1. By: Mauricio A. Hernández; Munir A. Jalil; Carlos Esteban Posada
    Abstract: Los ciclos económicos colombianos de la segunda mitad del siglo XX implicaron considerables variaciones en los agregados reales de la economía. A partir de un modelo con tecnología de producción AK y una función de producción de bienes de capital que presenta retornos decrecientes para la inversión, se calculó el costo de las fluctuaciones económicas en términos de consumo y bienestar de las familias. Según nuestros resultados, bajo estabilidad económica la tasa de crecimiento de largo plazo del consumo per cápita se habría incrementado entre 0,13 y 0,47 puntos porcentuales, pasando de 1,4% por año, en el escenario fluctuante, a una tasa en el intervalo 1,53% -1,87% anual. De acuerdo con diferentes niveles de la elasticidad intertemporal de sustitución del consumo, la compensación necesaria para hacer que las familias obtuvieran un mismo bienestar bajo los dos escenarios (fluctuante y estable) equivaldría, en promedio, a 4,7% del consumo inicial.
    Keywords: D61;E32.
  2. By: Peter Rowland
    Abstract: This is the second of three papers investigating the differences between foreign and domestic firms in Colombia. The study uses a dataset containing annual balance sheets and income statements for a sample of 3,452 firms for the period 1996 to 2003. This period includes the 1999 economic crisis. The dataset was obtained from the Superintendencia de Sociedades. If the development of foreign majority-owned firms, as an aggregate, is compared to that of domestic firms, it is shown that foreign firms have, in terms of aggregate sales, grown faster than their domestic counterparts, and that they were less affected by the 1999 crisis. Profit developments have also been more positive for foreign firms than for domestic firms, both in terms of operating margin and net-profit margin. While the net-profit margin of domestic firms was seriously affected by the 1999 crisis, that of foreign firms was hardly affected at all. The leverage of foreign firms, measured as total liabilities to total assets, has, furthermore, increased during the period, while that of domestic firms have remained more or less flat. For foreign minorityowned firms, on the other hand, the results are less conclusive.
  3. By: Sergio Pernice; Federico López Fagundez
    Abstract: This paper is the first of a series of works whose aim is trying to provide a framework for the understanding and valuation of debt indexed to real (gener- ally non-tradable) variables. In particular, in the present paper we develop a methodology to analytically value the new GDP-linked Argentinean warrant.
    Date: 2005–11
  4. By: Denis Drechsler; Johannes Jütting
  5. By: Herwig Immervoll (European Centre for Social Welfare Policy and Research, Vienna and OECD, Paris); Horacio Levy (Universitat Autònoma de Barcelona); José Ricardo Nogueira (Universidade Federal de Pernambuco, Recife); Cathal O´Donoghue (National University of Ireland and IZA, Bonn); Rozane Bezerra de Siqueira (Universidade Federal de Pernambuco)
    Abstract: The Brazilian government raises an amount of taxes that represents 35% of GDP and spends more than two-thirds of this on social programmes. These shares are in pair with the OECD averages and well in excess of Latin America averages. However, while the tax-benefit system in OECD countries notably reduces market inequality, in Brazil the government has not been able to significantly alleviate inequality and poverty. This paper investigates the impact of the government budget, particularly taxes and cash transfers, on income distribution in Brazil, and evaluates its efficiency and effectiveness in reducing inequality and poverty. The analysis also illustrates how microsimulation is a useful and powerful method for evaluating the impact of policy on income distribution.
    JEL: H22 H23 C81
    Date: 2005–10–21
  6. By: Philippe G. Leite
    Abstract: Following the topics discussed by Campante et al (2004), this paper contributes to the literature of the Brazilian racial discrimination by isolating the effect of intergeneration transmission of schooling and the school’s quality in the race discrimination effect. Instead of modelling just one mincer-type equation like others papers, it was decided to use the Two Stage Least Square Model where the first step of modelling control the endogeneity of individual schooling instrumenting it by family background and ability tests while attending school. The paper also provide a comparative profile of urban racial discrimination in the Northeast and the Southeast recognizing the important differences across regions in Brazil both in terms of economic development and racial composition of the population. As found by Campante et al (2004), results reveal that part of the component of wage differentials ordinarily attributed to labor market discrimination is actually explained by persistent educational inequalities between races. However because they didn’t control the potential bias due to the endogeneity of some variables, their discrimination effect is 15 to 19 percentage points higher than it should be. The mechanism of intergeneration transmission is correlated with financial constraints and higher education of parents because blacks have lower elasticities of education with respect to parent’s education due to selection and causation. Even controlling the model using instruments, Private sector remains as the sector where race discrimination is really an issue. Moreover, the regional profile suggests that the labor market is a more important locus of the racial issue in the Southeast than in the Northeast, although the significant presence in both regions. However, we are not controlling for selection bias and consequently the results must be viewed with caution because it is not sure how precise the estimations are.
    Keywords: Racial discrimination, Intergeneration Mobility, Labour Market, Public Policy, Regional differences, Education
    JEL: J15 J24 J31 J71 J78 I21
    Date: 2005–10–21
  7. By: José-Miguel Benavente; Luiz de Mello; Nanno Mulder
    Abstract: A good framework for investment in innovation can contribute to increasing Chile’s growth potential. Spending on R&D is currently low in relation to GDP and heavily reliant on government financing. Innovation activity in the business sector is also limited by insufficient seed and venture capital and human capital constraints. This is despite several favourable framework conditions, including a stable macro-economy, liberal foreign trade and investment regimes, and reasonably pro-competition regulations in product markets. The government intends to increase public spending on R&D, to be financed by revenue from the mining tax introduced in May 2005, and to create a National Innovation Council. The effectiveness of these measures will depend largely on the extent to which they will boost business-financed innovation consistent with Chile’s comparative advantages. This Working Paper relates to the 2005 OECD Economic Survey of Chile ( <P>Encourager l’innovation au Chili Un bon cadre pour l'investissement en innovation peut contribuer à augmenter le potentiel de croissance du Chili. La dépense en R&D par rapport au PIB est actuellement basse et financée principalement par l’État. L'activité d'innovation dans le secteur privé est également limitée par l'insuffisance du capital risque, des capitaux de démarrage et du capital humain. C'est en dépit de plusieurs conditions générales favorables, y compris un environnement macroéconomique stable, un régime commercial et d'investissement libéral et des régulations favorables à la concurrence sur des marchés de biens. Le gouvernement prévoit d'augmenter les dépenses publiques en R&D, financées par le revenu d’une nouvelle taxe minière introduite en mai 2005, et de créer un Conseil national d'innovation. L'efficacité de ces mesures dépendra en grande partie s'ils encouragent l’innovation financée par les entreprises sur la base des avantages comparatifs du Chili. Ce Document de travail se rapporte à l'Étude économique de l'OCDE du Chili, 2005 (
    Keywords: research and development, recherche-développement, innovation policy, politique d'innovation, Chile, Chili
    JEL: I20 O30 O54
    Date: 2005–10–27

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