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on Central and South America |
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Issue of 2009‒11‒14
nine papers chosen by |
| By: | Manuel Agosin; Franklin Huaita |
| Abstract: | This paper applies the overreaction hypothesis of De Bondt and Thaler (1985), developed for stock price behaviour, to capital flows to emerging markets. We find that a surge in capital flows, or what we call a capital boom, can predict future sharp contractions in capital flows, or sudden stops. We use a large list of possible economic fundamentals as control variables, and the results show that the best predictor of a sudden stop is a preceding capital boom. Moreover, the probability of a country undergoing a sudden stop increases considerably with the length of the boom: this probability more than doubles when the boom is three years old, and rises by three to four times when the boom lasts for four years. These results are interesting for two reasons. In the first place, they contradict previous studies that emphasize worsening fundamentals as the ultimate cause of a sudden stop. Second, they are of policy interest because of the enormous negative impacts that sudden stops have on the real economy |
| Keywords: | Capital flows, Emerging Markets, Sudden Stops, Overreaction. |
| JEL: | F30 F32 F39 |
| Date: | 2009–04 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp295&r=lam |
| By: | Manuel Agosin; Cristian Larraín; Nicolás Grau |
| Abstract: | Chile has experimented with practically every type of industrial policy in the book: from heavy import substitution, public ownership of domestic firms, directed credit, and heavy use of development banking; to a completely free-market approach. After the liberalization and privatization of the military regime’s early days in the decade of the seventies, a more pragmatic approach was adopted in the eighties. After the return to democracy in 1990, an even greater role was given to the state, while remaining in what could be labeled a horizontal approach, emphasizing the resolution of economy-wide market failures but still eschewing sector selection. A large number of programs aimed at facilitating investment and technological upgrading especially by small and medium enterprises (SMEs) were instituted in the early 1990s, mainly by CORFO, a development agency set up during the heyday of import substitution in 1939. CORFO has also attempted to relax these firms’ borrowing constraints through what amount to a series of development banking programs. During the current decade, Chile has moved to a more focused industrial policy, emphasizing the sectors in which the country has comparative advantages or those it could be expected to develop in a reasonable period of time. CORFO has given increasing emphasis to subsidizing the formation and operation of innovation-based consortia between private firms and universities and other activities related to innovation, increasingly in nine sectors singled out for special treatment by high-level National Council on Innovation for Competitiveness (NCIC) created in 2006.This paper studies three horizontal policy instruments and two vertical ones. The horizontal instruments are (1) a guarantee program for borrowing by SMEs (FOGAPE), (2) a highly ingenious small subsidy to new exports that was operated from 1985 through 2003, and (3) the innovation subsidies provided by CORFO. The vertical policy instruments are the activities of Fundacion Chile (FCh), a semi-public entrepreneur cum venture capitalist, and a CORFO program to attract foreign direct investment in information technology. One conclusion of the study is that most of the programs instituted by the government are well oriented, with clearly defined goals and addressing real problems faced by Chilean entrepreneurs. However, there is a great proliferation of programs, each one of them insufficiently funded. The country could benefit from a prioritization of needs and a consolidation of programs. Second, the instruments for making strategic bets on new sectors are particularly weak. In spite of a track record of success, they are endowed with resources that are too meager for them to have a major impact on the economy. In particular, FCh needs to refocus its activities on high-risk projects with long payoffs, something it cannot do with its small endowment. |
| JEL: | O15 O25 |
| Date: | 2009–11 |
| URL: | http://d.repec.org/n?u=RePEc:udc:wpaper:wp294&r=lam |
| By: | Javier OLIVERA |
| Abstract: | The distributional impact of the structural pension reform in Latin American countries has been largely absent in the economic debate. However, this reform may widen inequality in old-age and reduce welfare. In this paper we study the consequences of implementing a multi-pillar system in one of these countries. We take advantage of available administrative records for Peruvian workers to estimate inequality in pensions, pension debt and welfare. Overall, our results show that the pension debt and inequality can be substantially reduced without welfare losses. Thus, the proposed multi-pillar system allows recovering the principle of solidarity and saves fiscal resources. |
| Keywords: | Pension reform, pension inequality, social security, Latin America, Peru. |
| JEL: | H55 H63 I30 G23 |
| Date: | 2009–06 |
| URL: | http://d.repec.org/n?u=RePEc:ete:ceswps:ces09.11&r=lam |
| By: | Natalia Melgar (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | Past research has provided evidence of the role of personal characteristics as risk factors for depression. However, few researches examined jointly the impact of each characteristic and whether country attributes change the probability of being depressed. This is due to the use of single-country databases. Our aim is to extend previous findings by employing a much larger dataset and including the above-mentioned country effects. We estimate probit models with country effects and we also explore linkages between specific environmental factors and depression. The dataset for this research comes from the 2007 GALLUP Public Opinion Poll that allows us to consider a large and widely heterogeneous set of micro-data. Findings indicate that depression is positively related to being a woman, adulthood, divorce, widowhood, unemployment and low income. Moreover, we provide evidence of the significant association between economic performance and depression. Inequality raises the probability of being depressed, specially, for those living in urban areas. Finally, some population’s characteristics facilitate depression (age distribution and religious affiliation). |
| Keywords: | depression, health, well-being, cross-country research |
| JEL: | D01 I10 I12 J18 Z13 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:1909&r=lam |
| By: | Gustavo Bittencourt (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Nicolás Reig Lorenzi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | The paper studies the present situation of the biofuels industry in Uruguay and its possible perspectives. The development of this type of industry is a feasible option for the long run, in order to decrease the deep concentration of the energetic matrix and the high dependency from imported energetic sources. Nowadays, these activities are in the initial stages in the fields of production, regulation and promotion. Therefore, the medium and long run perspectives show certain degree of uncertainty, with positive factors but also limitations. Among the good aspects are the existence of natural comparative advantages and the legal framework. The more noticeable limitations are the problems in the availability of raw materials and the lack of development of the technological and logistic activities related with the production and trading processes. Besides this, other important issues are the institutional organization of the market and its operation, the configuration of precise and permanent rules of the game, and the deep exploration of possible regional complementarities, specially with Brazil. The idea is to benefit from the improvements in the scale and technology of these agroindustrial chains. |
| Keywords: | biofuels, energy matrix, biodiesel, ethanol, biomass, MERCOSUR. |
| JEL: | Q42 |
| Date: | 2009–07 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:1109&r=lam |
| By: | Rossana Patrón (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | The evidence of effects of education activities on growth is mixed. So, could education be good, neutral, or bad, depending on the case? While the model in this paper remains close to the Heckscher-Ohlin tradition, it is shown that, contrary to the standard results, it is the net effect of prices, taxation, and accumulation of endowments that determines the Rybczynski-type growth effects, which may help explain the lack of consensus in the empirical literature on education and growth. A central feature of the model is that the accumulation of endowments depends on the output of education, while the changes in labour supply, which determine the effective production possibilities frontier, also depend on individuals’ decisions on allocation of time. In the paper, the risks of a labour supplyreducing government intervention are discussed. The analysis has implications for policymakers in developing countries where education needs to be enhanced, as it reveals the possibility of a ‘bad tax reform’ where the intentions of reformers are not met by the results. A sufficient condition to avoid this situation is identified in the paper. |
| Keywords: | education, fiscal policy, developing countries |
| JEL: | I22 F16 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:1709&r=lam |
| By: | Natalia Melgar (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Giorgina Piani (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Andres Taroco (Licenciatura en Filosofía, Facultad de Humanidades y Ciencias de la Educación-UDELAR) |
| Abstract: | This papers aims at dimensioning the level of tolerance and its determinants. For doing so, we construct maps that describe world reserves of tolerance and we consider four basic dimensions: ethnic, religion, homosexuality and lesbianism and immigrants. Keeping in mind that individual perception of tolerance level is influenced by the combination of social factors and personal characteristics; we aim at assessing what are the significant personal attributes that shape tolerant behavior and whether country effects matter. Moreover, we examine whether it is possible to find some typologies of countries. Our dataset is the GALLUP Poll (2007) that includes a large and heterogeneous set of countries (approximately 200). Findings indicate that the probability of being tolerant at the micro-level towards ethnic or religious minorities or immigrants is relatively high while it goes down in the case of homosexuals and lesbians. Moreover, we find that some personal characteristics and environmental factors have a significant impact on the probability of being tolerant. However, it is clear that tolerance is a complex phenomenon whose further research will require a historical perspective. |
| Keywords: | tolerance, microeconomic behavior, cross-country research, GALLUP |
| JEL: | A14 D01 O57 |
| Date: | 2009–09 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:2009&r=lam |
| By: | Pablo Brañas-Garza (Universidad de Granada- España); Juan C. Cárdenas (Universidad de los Andes- Colombia); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | There is not general consensus about if women are more or less generous than men. Although the number of papers supporting more generous females is a bit larger than the opposed it is not possible to establish any definitive and systematic gender bias. This paper provides new evidence on this topic using a unique experimental dataset. We used data from a field experiment conducted under identical conditions (and monetary payoffs) in 6 Latin American cities, Bogotá, Buenos Aires, Caracas, Lima, Montevideo and San José. Our dataset amounted to 3,107 experimental subjects who played the Trust Game. We will analyze the determinants of behavior of second movers, that is, what determines reciprocal generosity. In sharp contrast to previous papers we found that males are more generous than females. In the light of this result, we carried out a systematic analysis of individual features (income, education, age, etc.) for females and males separately. We found differential motivations for women and men. Third, we see that (individual) education enhances prosocial behavior. Lastly, we see that subjects’ expectations are crucial. |
| Keywords: | reciprocal altruism, gender, education |
| JEL: | C93 D64 J16 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:1609&r=lam |
| By: | Ana Balsa (Health Economics Research Group, Department of Sociology, University of Miami); Máximo Rossi (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República); Patricia Triunfo (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República) |
| Abstract: | This paper analyzes and compares socioeconomic inequalities in the use of healthcare services by the elderly in four South-American cities: Buenos Aires, Santiago, Montevideo and San Pablo. We use data from SABE, a survey on Health, Well-being and Aging administered in 2000. After having accounted for socioeconomic inequalities in healthcare needs, we find socioeconomic inequities favoring the rich in the use of preventive services (mammograms, pap tests, breast examinations, and prostate exams) in all of the studied cities. We also find inequities in the likelihood of having a medical visit in Santiago and Montevideo, and in some measures of quality of access in Santiago, Sao Paulo, and Buenos Aires. Santiago depicts the highest inequities in medical visits and Uruguay the worse indicators in mammograms and pap scans tests. For all cities, inequities in preventive services at least double inequities in other services. We do not find evidence of a trade-off between levels of access and equity in access to healthcare services. The decomposition of healthcare inequalities suggests that inequities within each health system are more important than between systems. |
| Keywords: | inequalities, healthcare, medical visit, preventive services |
| JEL: | I1 I11 I12 I18 |
| Date: | 2009–08 |
| URL: | http://d.repec.org/n?u=RePEc:ude:wpaper:1509&r=lam |