New Economics Papers
on Central and South America
Issue of 2011‒03‒05
six papers chosen by

  1. Modeling Default Probabilities: the case of Brazil By Benjamin M. Tabak; Daniel O. Cajueiro; A. Luduvice
  2. Do Worker Remittances Reduce Output Volatility in Developing Countries? By Ralph Chami; Dalia Hakura; Peter Montiel
  3. The Great Recession, 'Rainy Day' Funds, and Countercyclical Fiscal Policy in Latin America By Eduardo Fernández-Arias; Peter Montiel
  4. Latin America's Middle Sectors: Key Players in a Renewed Social Contract? By Anna Pietikäinen
  5. Education Policies for Upward Social Mobility in Latin America By Christian Daude
  6. Determinantes socioeconómicos de las transiciones entre niveles educativos: un enfoque sobre género y ruralidad en el Perú By Denice Cavero; Verónica Montalva; José Rodríguez

  1. By: Benjamin M. Tabak; Daniel O. Cajueiro; A. Luduvice
    Date: 2011–01
  2. By: Ralph Chami (International Monetary Fund); Dalia Hakura (International Monetary Fund); Peter Montiel (Williams College)
    Abstract: Remittance inflows have increased considerably in recent years and are large relative to the size of many recipient economies. The theoretical and empirical effects of remittance inflows on output growth volatility are, however, ambiguous. On the one hand, remittances have been a remarkably stable source of income, relative to other private and public flows, and they seem to be compensatory in nature, rising when the home country’s economy suffers a downturn. On the other hand, the labor supply effects induced by altruistic remittances could cause the output effects associated with technology shocks to be magnified. This paper finds robust evidence for a sample of 70 remittance-recipient countries, including 16 advanced economies and 54 developing countries that remittances have a negative effect on output growth volatility, thereby supporting the notion that remittance flows are a stabilizing influence on output.
    Keywords: Remittances, output volatility, developing countries
    JEL: D02 D64 F02 F22 F24
    Date: 2010–10
  3. By: Eduardo Fernández-Arias (Inter-American Development Bank); Peter Montiel (Williams College)
    Abstract: This paper examines the fiscal policy options that were available to Latin American countries at the onset of the current global economic crisis. It concludes that most of the major countries in the region possessed the fiscal space (as measured by credible fiscal sustainability and debt headroom) to run prudent countercyclical fiscal deficits. For those countries, the appropriate policy response involved a constrained fiscal expansion focused on productive public spending and financed by drawing on the “rainy day” funds - in the form of large stocks of foreign exchange reserves - that they accumulated in prior years, rather than by market borrowing. It shows that the recent surge in multilateral financial activity to alleviate market illiquidity, whether intended for reserve or budget support, strengthens the case for this policy prescription : with multilateral support, the appropriate policy response is more expansionary, and its financing is less reliant on market borrowing.
    Keywords: countercyclical policy, fiscal space, international reserves, multilateral financial support
    JEL: E62 E63 F34
    Date: 2010–07
  4. By: Anna Pietikäinen
    Abstract: A strengthened social contract in Latin American countries relies on the improved quality of public services such as health and education, which would build a constituency for a broader tax base. Latin American middle-income sectors express strong support for democracy but they are critical of how it works, largely due to the low quality of public services. Fiscal policy is at the heart of the state's relationship with its citizens - all the more so in Latin America, given the weak social contracts and the consolidation of its democracies.
    Date: 2010–11
  5. By: Christian Daude
    Abstract: Income is very unequally distributed in Latin America - but so too are opportunities for upward mobility. Early childhood development is a powerful mechanism to level the social playing field. More and better secondary education is key. Better administration of schools, combining greater flexibility with more accountability, a modern system of evaluation and incentives for school administrators and teachers are important ingredients for reforms.
    Date: 2010–11
  6. By: Denice Cavero; Verónica Montalva; José Rodríguez (Departamento de Economía- Pontificia Universidad Católica del Perú)
    Abstract: An approach to progress through school is relevant since it allows us to analyze a broad range of educational levels, if a student is able to progress to the next grade, if he or she repeats the grade, or if he or she drops out of school. Our aim is to determine which are the factors associated with these educational results in Peru, where access and continuance in school is still a worrying matter. Our methodology comprises the estimation of both probit and multinomial models. It is important to mention that both models provide very similar results among those results which are comparable. Among the different factors, adolescent and child labor stands out as a constant disadvantage for individuals seeking to stay in the educational system. This result is maintained throughout the educational levels. The study focused particularly on rural areas of Peru and within this area on gender inequality. In rural areas of Peru, educational transition from primary to secondary school is clearly a breaking point because the proportion of individuals who progress in this transition is significantly lower than in other transitions. The situation of rural women is very interesting. We find that although they have lower repetition probabilities during primary school, they have greater dropout probabilities in the primary-secondary transition, which can turn out to be more detrimental for their long-term education acquisition. Doing chores is one of the factors that more significantly affects rural women’s dropout rate in the primary-secondary transition. Also, being behind in school (being older than one’s classmates) has a greater negative effect on women than on men. Finally, adolescent pregnancy prevents women’s progress to a large extent during secondary school. Although we do not consider our results as conclusive, we do believe that they contribute to deepen the knowledge about the dynamic of progress through school in Peru.
    Date: 2011

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