New Economics Papers
on Central and South America
Issue of 2008‒09‒29
four papers chosen by

  1. Is there an openness Kuznets curve? Evidence from Latin America By Stephen Dobson; Carlyn Ramlogan
  2. Corruption, privatisation and the distribution of income in Latin America By Antonio Rodriguez Andres; Carlyn Ramlogan-Dobson
  3. Analysing the Impact of Natural Hazards in Small Economies: The Caribbean Case By Heger, Martin; Julca, Alex; Paddison, Oliver
  4. Earnings Mobility in Times of Growth and Decline: Argentina from 1996 to 2003 By Fields, Gary S.; Sanchez Puerta, Maria Laura

  1. By: Stephen Dobson; Carlyn Ramlogan
    Abstract: Numerous studies have examined the relationship between income inequality and trade openness. This paper departs from previous work by considering a possible non-linear relationship between trade openness and inequality. The evidence is consistent with the idea of a Kuznets curve: inequality increases until a critical level of openness is reached after which inequality begins to fall. The finding of a non-linear relationship between trade openness and inequality implies that governments in Latin America should introduce redistribution policies, alongside trade liberalisation measures, so as to ease the adverse effects of trade liberalisation.
    Date: 2008–07
  2. By: Antonio Rodriguez Andres; Carlyn Ramlogan-Dobson
    Abstract: This paper presents new evidence on income inequality in Latin America over the period 1981-2000. Using a panel data methodology, we find that a reduction in corruption is associated with a rise in inequality. This counterintuitive result can be explained by privatisation. Privatisation removes industries from government influence (and corruption) and worsens income inequality as new owners strive for efficiency and profits. The paper argues that structural reform policies aimed primarily at achieving positive and increasing growth rates do not adequately address the income distribution problem.
    Keywords: Corruption, Latin America, Income inequality, Instrumental variables, Panel data, Privatisation.
    JEL: O15 O54
    Date: 2008–07
  3. By: Heger, Martin; Julca, Alex; Paddison, Oliver
    Abstract: This paper analyses the impact of natural disasters in the Caribbean. The economic impact of natural disasters in the region has been significant, resulting in widespread destruction of the productive economy. This paper presents the main macroeconomic impact of disasters, e.g., a deteriorating fiscal balance, a collapse of growth and a worsening external balance, as a consequence of damage resulting from the event. By making special reference to the small-island developing state nature of many countries in the region, valuable lessons of the impact of such disasters on the capital stock can be learnt, particularly as the interruption of production of goods and services can be particularly devastating in an environment where few large sectors (agriculture, tourism) dominate the economic landscape.
    Keywords: natural disasters, Caribbean, diversification, trade, environment
    Date: 2008
  4. By: Fields, Gary S.; Sanchez Puerta, Maria Laura
    Abstract: In recent years, the economy of Argentina has experienced both rapid economic growth and severe economic decline. In this paper, we use a series of one-year long panels to study who gained the most in pesos when the economy grew and who lost the most in pesos when the economy contracted. To answer these questions, we test two hypotheses both unconditionally and conditionally. The ?divergence of earnings? hypothesis holds that in any given year, the highest earning individuals are those who experienced the largest earnings gains or the smallest earnings losses in pesos. The ?symmetry of gains and losses? hypothesis holds that those groups that gained the most in pesos when the economy grew are those that lost the most in pesos when the economy contracted. Both hypotheses are decisively rejected in the data. Rather, we find that it is the lowest income individuals and groups who gain the most in pesos, whether in good times or in bad. Thus, the panel data analysis performed in this paper presents a picture of economic growth that is much more pro-poor than one gets from cross sectional inequality comparisons.
    Keywords: finance, growth, inequality, Argentina, survey, gains, losses
    Date: 2008

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.