New Economics Papers
on Central and South America
Issue of 2007‒02‒24
six papers chosen by

  1. "Land Rental and Sales Markets in Paraguay" By Thomas Masterson
  2. The Brazilian ’Tax War’: The Case of Value-Added Tax Competition Among the states By Luiz de Mello
  3. Monetary Policy and Macroeconomic Stability in Latin America: The Cases of Brazil, Chile, Colombia and Mexico By Luiz de Mello; Diego Moccero
  4. Returns to schooling in Uruguay By Graciela Sanromán
  6. CASH TRANSFER PROGRAMMES IN BRAZIL: IMPACTS ON INEQUALITY AND POVERTY By Fabio Veras Soares; Sergei Soares; Marcelo Medeiros; Rafael Guerreiro Osorio

  1. By: Thomas Masterson
    Abstract: This paper examines the claim that the land rental market can be an effective means of redistributing access to, if not ownership of, land to the rural poor, using Paraguay as our model. The land sales market is also examined. The land rental market in ParaguayÕs rural areas is found to be very thin, due at least in part to a lack of available credit for inputs. Renting-in substantial amounts of land is found to contribute significantly to household per-capita income.
    Date: 2007–02
  2. By: Luiz de Mello
    Abstract: This paper tests for horizontal tax competition in the VAT for a sample of Brazilian states in the period 1985-2001. The states have considerable autonomy to set their VAT rates and bases, often using this tax as an industrial policy tool. The empirical findings, based on the estimation of a tax reaction function in an error-correction set-up, confirm the hypothesis of horizontal tax competition: the states react strongly to changes in their neighbours? VAT code, especially those that belong to the same geo-economic region. Also, there appears to be a Stackelberg leader among the states, with the remaining jurisdictions responding strongly to its policy moves. There is no co-occupancy of tax bases between different levels of government and hence limited scope for vertical externalities in tax setting. But the fact that the federal government shares with the states part of the revenue of its more elastic taxes, such as the income tax, appears to affect the opportunity cost of horizontal tax competition. <P>La "guerre fiscale" au Brésil : La concurrence des états sur la taxe sur la valeur ajoutée <BR>Ce document présente une analyse empirique de la concurrence horizontale sur la taxe sur la valeur ajoutée (TVA) parmi les états du Brésil durant la période 1985-2001. Les états brésiliens ont une autonomie considérable en matière de politique fiscale pour établir le taux d’imposition et l’assiette de leur TVA. Ils se servent souvent de cet impôt comme instrument de politique industrielle. Les résultats de l’analyse empirique basée sur l’estimation d’une fonction de réaction fiscale avec un mécanisme de correction d’erreur confirme l’hypothèse de concurrence horizontale parmi les états: ils réagissent fortement aux changements des taux d’imposition de la TVA de leurs voisins, surtout ceux qui appartiennent à la même région géo-économique. Par ailleurs, il y a un leader Stackelberg parmi les états, puisque les autres administrations réagissent fortement à sa politique fiscale. Les différents niveaux d’administration ne partagent pas les mêmes assiettes de sorte que les externalités verticales associées à la politique fiscale sont assez limitée au Brésil. Néanmoins, le fait que l’administration fédérale partage avec les états une part importante des recettes de ses impôts plus élastiques, tel que l’impôt sur le revenu, affecte le coût d’opportunité de la concurrence horizontale parmi les états en terme de politique fiscale.
    JEL: H2 H7
    Date: 2007–02–14
  3. By: Luiz de Mello; Diego Moccero
    Abstract: In 1999, new monetary policy regimes were adopted in Brazil, Chile, Colombia and Mexico, combining inflation targeting with floating exchange rates. These regime changes have been accompanied by lower volatility in the monetary stance in Brazil, Colombia and Mexico, despite higher inflation volatility in Brazil and Colombia. This paper estimates a conventional New Keynesian model for these four countries and shows that: i) the post-1999 regime has been associated with greater responsiveness by the monetary authority to changes in expected inflation in Brazil and Chile, while in Colombia and Mexico monetary policy has become less counter-cyclical, ii) lower interest-rate volatility in the post-1999 period owes more to a benign economic environment than to a change in the policy setting, and iii) the change in the monetary regime has not yet resulted in a reduction in output volatility in these countries. <P>Politique monétaire et stabilité macroéconomique en Amérique latine : Brésil, Chili, Colombie et Mexique <BR>De nouveaux régimes monétaires ont été adoptés par le Brésil, le Chili, la Colombie et le Mexique en 1999. Basés sur le ciblage de l’inflation et des taux de change flottants, ces régimes ont été accompagnés d’une réduction de la volatilité de la politique monétaire au Brésil, en Colombie et au Mexique, en dépit de l’augmentation de la volatilité de l’inflation au Brésil et en Colombie. Ce document estime un modèle conventionnel du type « New Keynesian » pour ces quatre pays et démontre que: i) les autorités monétaires ont réagi plus fortement aux changements des expectatives d’inflation à partir de 1999 au Brésil et au Chili, tandis que la politique monétaire est devenue moins contre-cyclique en Colombie et au Mexique, ii) la réduction de la volatilité du taux d’intérêt à partir de 1999 est due à un environnement économique plus favorable plutôt qu’à l’adoption d’un nouveau régime monétaire, et iii) le changement du régime monétaire n’a pas encore conduit à une réduction de la volatilité de l’activité en ces pays.
    JEL: C15 C22 E52 O52
    Date: 2007–02–14
  4. By: Graciela Sanromán (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: In this paper we analyze the economic returns to schooling in Uruguay. Instrumental variables are used to estimate mean and quantile regressions. An indicator of whether an Internet connection is available at home is used as an instrument for the years of schooling of the household head. The evidence shows that the simple Mincer OLS estimates are downward biased. When estimates are controlled for measurement error in schooling reports the results indicate that an additional year of schooling increases wage rates by 22 percent.
    Keywords: returns to schooling, schooling premium
    JEL: C13 I21 J24 J31
    Date: 2006–11
  5. By: Marcelo Medeiros (International Poverty Centre); Joana Costa (International Poverty Centre)
    Abstract: We propose two different concepts of feminization of poverty and analyze household survey data to verify if there is an ongoing feminization of poverty in eight Latin American countries, according to each of these concepts. We also verify if our results respond to changes in values of poverty lines and to different scenarios of intra-household inequalities, concluding that poverty may be higher among women, but there is no clear evidence of a recent and widespread feminization of poverty in the countries studied.
    Keywords: Feminization of poverty, Gender inequalities, Poverty, Female headed households, Latin America
    JEL: I3 D31 H2 H3
    Date: 2006–05
  6. By: Fabio Veras Soares (International Poverty Centre, UNDP/IPEA); Sergei Soares (International Poverty Centre, UNDP/IPEA); Marcelo Medeiros (International Poverty Centre, UNDP/IPEA); Rafael Guerreiro Osorio (International Poverty Centre, UNDP/IPEA)
    Abstract: This paper evaluates the contribution of cash transfer programmes to the observed fall in inequality in Brazil between 1995 and 2004 as well as its impact on poverty. We use the 2004 Brazilian National Household Survey (PNAD) that for the first time collected data on the incidence of some of the cash transfer programmes. We develop a methodology to separate out the income of different cash transfer programs, cross-check the survey information with administrative records, evaluate the incidence of the programmes, calculate their concentration indexes and decompose the Gini index into the contribution of each income source. We find that both BPC – the means tested old age pension and disability grant programme – and Bolsa Família are quite well targeted: 74% of BPC reported income and 80% of Bolsa Família reported income goes to families living below the poverty line (half of minimum wage per capita), and that they were jointly responsible for 28% of the fall in the Gini inequality between 1995 and 2004 (7% from BPC and 21% from Bolsa Família). This contribution is quite sizable since BPC and Bolsa Família together account for a tiny 0.82% of the total family income reported in the National Household Survey. It is also striking that pensions equal to the minimum wage – contributory or not – contributed 32% to the fall in the Gini index, but this better performance was due to the fact that they make up 4.6% of the total family income.
    Keywords: Income distribution, Cash tranfer programmes, Poverty
    JEL: D31
    Date: 2006–06

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