nep-lam New Economics Papers
on Central and South America
Issue of 2007‒08‒27
four papers chosen by
Maximo Rossi
University of the Republic

  1. Metas de inflação e investimento: o caso do Brasil By Marco Flavio da Cunha Resende; Fabiana Lima
  2. Revisión del cálculo del índice de tasa de cambio real en Colombia By Roberto Fortich
  3. Specialization and adjustment during the growth of China and India : the Latin American experience By Rubiano, Eliana; Olarreaga, Marcelo; Lederman, Daniel
  4. The growth of China and India in world trade : opportunity or threat for Latin America and the Caribbean? By Soloaga, Isidro; Olarreaga, Marcelo; Lederman, Daniel

  1. By: Marco Flavio da Cunha Resende (Cedeplar-UFMG); Fabiana Lima (PUC-SP)
    Abstract: In this paper two hypotheses about the relationship between monetary policy and investment in the context of the inflation target system were tested. One of these hypotheses is based on the idea of neutrality of money, and the other hypothesis is based on the reject of that idea. An investment equation for the Brazilian economy was estimated (1848-2005), and a proxy for current expectations about monetary policy was adopted as one of the independent variables of the equation. Structural break tests for the equation were conduced by the assumption of changes on the coefficients of the equation after the inflation target system implementation. Another equation using piece-wise dummy variable was estimated. The results highlight that a negative correlation between current expectation of restrictive monetary policy and current investment rose after the inflation target system implementation.
    Keywords: inflation target; monetary policy; investment
    JEL: E12 E13 E22 E52
    Date: 2007–08
  2. By: Roberto Fortich
    Abstract: En este trabajo se analizan las condiciones que rodean la existencia de las Tasas de Cambio. Luego se explica la importancia del Índice de Tasa de Cambio Real, y se revisa la metodología de su cálculo usada en Colombia por el Banco de la República.
    Date: 2007–08–13
  3. By: Rubiano, Eliana; Olarreaga, Marcelo; Lederman, Daniel
    Abstract: This paper examines the extent to which the growth of China and India in world markets is affecting the patterns of trade specialization in Latin American economies. The authors construct Vollrath ' s measure of revealed comparative advantage by 3-digit ISIC sector, country, and year. This measure accounts for both imports and exports. The empirical analyses explore the correlation between the revealed comparative advantage of Latin America and the two Asian economies. Econometric estimates suggest that the specialization pattern of Latin A-with the exception of Mexico-has been moving in opposite direction of the trade specialization pattern of China and India. Labor-intensive sectors (both unskilled and skilled) probably have been negatively affected by the growing presence of China and India in world markets, while natural resource and scientific knowledge intensive sectors have probably benefited from China and India ' s growth since 1990.
    Keywords: Free Trade,Economic Theory & Research,Trade Policy,Water and Industry,Agricultural Knowledge & Information Systems
    Date: 2007–08–01
  4. By: Soloaga, Isidro; Olarreaga, Marcelo; Lederman, Daniel
    Abstract: This paper studies the relationship between the growth of China and India in world merchandise trade and Latin American and Caribbean commercial flows from two perspectives. First, the authors focus on the opportunity that China and India ' s markets have offered Latin American and Caribbean exporters during 2000-2004. Second, empirical analyses examine the partial correlation between Chinese and Indian bilateral trade flows and Latin American and Caribbean trade with third markets. Both analyses rely on the gravity model of international trade. Econometric estimations that control for the systematic correlation between expected bilateral trade volumes and the size of their regression errors, as well as importer and exporter fixed effects and year effects, provide consistent estimates of the relevant parameters for different groups of countries in Latin America and the Caribbean. Results suggest that the growth of the two Asian markets has produced large opportunities for Latin American and Caribbean exporters, which nevertheless have not been fully exploited. The evidence concerning the effects of Chinese and Indian trade with third markets is not robust, but there is little evidence of negative effects on Latin American and Caribbean exports of non-fuel merchandise. In general, China ' s and to a large extent India ' s growing presence in world trade has been good news for Latin America and the Caribbean, but some of the potential benefits remain unexploited.
    Keywords: Economic Theory & Research,Free Trade,Currencies and Exchange Rates,Trade Policy,Markets and Market Access
    Date: 2007–08–01

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