nep-lam New Economics Papers
on Central and South America
Issue of 2011‒04‒23
eleven papers chosen by
Maximo Rossi
University of the Republic

  1. Una caracterización de las empresas privadas no financieras de Chile By Josué Pérez Toledo
  2. A Solution to Fiscal Procyclicality: the Structural Budget Institutions Pioneered by Chile By Jeffrey Frankel
  3. The Credit Channel and Monetary Transmission in Brazil and Chile: A Structural VAR Approach By Luis Catão;; Adrian Pagan
  4. Tightening Tensions: Fiscal Policy and Civil Unrest in Eleven South American Countries, 1937 - 1995 By Joachim Voth
  5. Descomposición Histórica de Choques del Tipo de Cambio Real en Colombia: un Enfoque DSGE By Luis Alejandro Lee P; Angélica María Quiroga E.
  6. Do Bans on Carrying Firearms Work for Violence Reduction? Evidence from a Department-level Ban in Colombia By Edgar Villa; Jorge A. Restrepo
  7. Latin America's Economic Challenges: Lessons for Emerging Economies By Nora Lustig; Jaime Ros
  8. Inequality and Poverty under Latin America's New Left Regimes By Darryl McLeod; Nora Lustig
  9. The Knowledge Bank and Poverty Reduction By Nora Lustig
  10. The Rise and Fall of Income Inequality in Latin America By Nora Lustig; Leonardo Gasparini
  11. Social Assistance and Birth Outcomes: Evidence from the Uruguayan PANES By Veronica Amarante; Marco Manacorda; Edward Miguel; Andrea Vigorito

  1. By: Josué Pérez Toledo
    Abstract: El documento presenta una caracterización del sector de las empresas privadas no financieras (SEPnF) de Chile en base a información de sus activos, pasivos, ingresos, gastos y empleo. En el año 2008, este sector representaba un 70% de la producción nacional. De este porcentaje, aproximadamente un tercio fue aportado por las sociedades anónimas abiertas, entidades que deben informar periódicamente sus antecedentes contables/financieros a la Superintendencia de Valores y Seguros. En contraste, un 66% de la producción del SEPnF es aportado por un gran número de firmas que no tienen la obligación anterior. La fuente de información del estudio son los registros administrativos provenientes del Servicio de Impuestos Internos, SII, que cubren un universo aproximado de 420 mil empresas para el año 2008. Esta información de base, al no estar exenta de presentar registros anómalos o ausentes, fue depurada e imputada a través de métodos estadísticos que se detallan al final del documento. Dentro de los principales resultados destacan el hecho que elementos como la organización jurídica, tamaño de la empresa y la actividad económica desarrollada, inciden en la composición de activos y pasivos, costos/ingresos y productividad laboral. En particular, al combinar distintas variables del balance y del estado de resultado, se aprecian diferencias entre empresas supervisadas y no supervisadas en sus ratios de liquidez y de actividad o gestión, así como relaciones inversas entre tamaño y liquidez. En términos de remuneraciones medias, se observaron diferencias significativas entre empresas supervisadas y no supervisadas, incluso en la comparación por actividad económica
    Date: 2010–12
  2. By: Jeffrey Frankel
    Abstract: Historically, many countries have suffered a pattern of procyclical fiscal policy: spending too much in booms and then forced to cut back in recessions, thereby exacerbating the business cycle. This problem has especially plagued Latin American commodity-producers. Since 2000, fiscal policy in Chile has been governed by a structural budget rule that has succeeded in implementing countercyclical fiscal policy. The key innovation is that the two most important estimates of the structural versus cyclical components of the budget – trend output and the 10-year price of copper – are made by expert panels and thus insulated from the political process. Chile’s fiscal institutions could usefully be emulated everywhere, but especially in other commodityexporting countries. This paper finds statistical support for a series of hypotheses regarding forecasts by official agencies that have responsibility for formulating the budget. 1) Official forecasts of budgets and GDP in a sample of 33 countries are overly optimistic on average. 2) The bias toward over-optimism is stronger the longer the horizon 3) The bias is greater among European governments that are politically subject to the budget rules in the Stability and Growth Pact. 4) The bias is greater at the extremes of the business cycle, particularly in booms. 5) In most countries, the real growth rate is the key macroeconomic input for budget forecasting. In Chile it is the price of copper. 6) Real copper prices mean-revert in the long run, but this is not always readily perceived. 7) Chile’s official forecasts are not overly optimistic on average. 8) Chile has apparently avoided the problem of official forecasts that unrealistically extrapolate in boom times. The conclusion is that official forecasts, if not insulated from politics, tend to be overly optimistic and that the problem can be worse when the government is formally subject to a budget rule. The key innovation that has allowed Chile in general to achieve countercyclical fiscal policy, and in particular to run surpluses in booms, is not just a structural budget rule in itself, but rather the regime that entrusts to panels of independent experts the responsibility for estimating the extent to which contemporaneous copper prices and GDP have departed from their long-run averages.
    Date: 2011–01
  3. By: Luis Catão;; Adrian Pagan
    Abstract: We use an expectation-augmented SVAR representation of an open economy New Keynesian model to study monetary transmission in Brazil and Chile. The underlying structural model incorporates key structural features of Emerging Market economies, notably the role of a bank-credit channel. We find that interest rate changes have swifter effects on output and inflation in both countries compared to advanced economies and that exchange rate dynamics plays an important role in monetary transmission, as currency movements are highly responsive to changes in policy-controlled interest rates. We also find the typical size of credit shocks to have large effects on output and inflation in the two economies, being stronger in Chile where bank penetration is higher.
    Date: 2010–05
  4. By: Joachim Voth
    Abstract: Efforts at fiscal consolidation are often limited because of concerns over potential social unrest. From German austerity measures during the 1930s to the violent demonstrations in Greece in 2010, hard times have tended to go hand in hand with antigovernment violence. In this paper, I assemble cross-country evidence from eleven South American countries for the period 1937 to 1995 about the extent to which societies become unstable after budget cuts. The results show a clear positive correlation between austerity and instability. I examine the extent to which this relationship simply captures the fact that fiscal retrenchment and economic slumps are correlated, and conclude that this is not what is driving the effect. Finally, I test for interactions with various economic and political variables. While autocracies and democracies show a broadly similar response to budget cuts, countries with a history of stable institutions are less likely to see unrest as a result of austerity measures.
    Date: 2011–02
  5. By: Luis Alejandro Lee P; Angélica María Quiroga E.
    Abstract: El trabajo utiliza un modelo DSGE de ciclos reales con dos sectores productivos, uno transable y uno no transable, para realizar una descomposición histórica de choques del tipo de cambio real en Colombia en el período comprendido entre los años 2000 y 2009. Dicha descomposición estima el poder explicativo de choques estructurales en la tecnología y tasa de interés período a período, lo cual representa una ventaja frente a metodologías más tradicionales como la descomposición de varianza, la cual realiza el ejercicio como un promedio de todo el período de observación. Los resultados muestran que en promedio el modelo explica 55% del comportamiento del tipo de cambio real, teniendo que al principio y al final de la década el choque al tipo de interés fue el dominante, mientras en los años 2006, 2007 y 2008 lo fue el choque a la productividad transable.
    Date: 2010–06–30
  6. By: Edgar Villa; Jorge A. Restrepo
    Abstract: This paper aims to fill a gap in the assessment of armed violence reduction programming by evaluating the impact of a ban on gun-carrying licenses in Colombia. Exploiting regional and temporal variations, and controlling by enforcement levels we found a large and significant violence reduction impact, both in terms of firearm homicides and firearms-related intentional injuries. These positive effects seem to diminish as time passes by and rely on continuous and significant enforcement of the restriction. This gun control intervention operates by extending law enforcement to previously uncontrolled territories and periods, thus increasing gun availability costs for violent criminals.
    Date: 2010–09–30
  7. By: Nora Lustig (Department of Economics, Tulane University); Jaime Ros (Graduate School of Economics, National Autonomous University of Mexico (UNAM))
    JEL: O10
    Date: 2011–02
  8. By: Darryl McLeod (Department of Economics, Fordham University); Nora Lustig (Department of Economics, Tulane University)
    Abstract: Inequality and poverty fell sharply in many Latin American countries during a decade in which voters in ten countries chose left-leaning leaders. Are these developments related? Using data for 18 Latin American countries, this paper presents econometric evidence that social democratic regimes in Brazil and Chile were more successful at reducing inequality and poverty than the so-called populist regimes of Argentina, Bolivia, and Venezuela. Both groups implemented policies to redistribute income, but the social democratic regimes' efforts were more effective. Argentina and Venezuela started the 1990-2008 sample window with lower levels of inequality, so to some extent recent reductions in inequality are a return to "normal" levels (as estimated by fixed effects). Conversely, inequality and poverty in Brazil and Chile fell to historic lows. Second, overall terms of trade shocks were more favorable to Argentina and Venezuela, so part of the drop in inequality can be attributed to commodity price booms.
    Keywords: poverty, inequality, left regimes
    JEL: O15 P16 I32
    Date: 2011–03
  9. By: Nora Lustig (Department of Economics, Tulane University)
    Abstract: The World Bank's (WB) mission and overarching goal is to reduce poverty. Moving ahead, what can the WB do to enhance its contribution to the poverty reduction agenda? This question can be answered from at least two perspectives: the WB as a lending institution and the WB as a knowledge bank. This article will concentrate on the latter and suggest two areas in which more and better information and analysis could help move the poverty reduction agenda forward: improving data on poverty and redressing poverty assessments to include the impact of fiscal policy on poverty and inequality.
    Keywords: poverty data, errors, gaps, inconsistencies
    JEL: O10
    Date: 2011–02
  10. By: Nora Lustig (Department of Economics, Tulane University); Leonardo Gasparini (Center for Distributional, Labor and Social Studies (CEDLAS) at Universidad Nacional de La Plata)
    JEL: O10
    Date: 2011–02
  11. By: Veronica Amarante; Marco Manacorda; Edward Miguel; Andrea Vigorito
    Abstract: This paper estimates the impact of a large temporary poverty relief program, Uruguay’s PANES—on birth outcomes. Using program administrative data and longitudinal vital statistics, a significant and precisely estimated reduction in the fraction of low-weight newborns (less than 2,500 g. ) on the order of 10 to 20 percent was found to be a result of treatment. The cash (and in-kind) transfer components of the program were considered to drive the results, suggesting that unrestricted social assistance has the potential to positively affect birth outcomes, most likely through improved nutrition. Assuming that all the effect of the program was through the transfer, an elasticity of low birthweight with respect to welfare transfers on the order of around 0. 30 can be inferred.
    JEL: I18 I32 I38 J13
    Date: 2011–03

This nep-lam issue is ©2011 by Maximo Rossi. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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.