New Economics Papers
on Central and South America
Issue of 2011‒05‒24
five papers chosen by

  1. Subjectivity in Credit Allocation to Micro-Entrepreneurs: Evidence from Brazil By Isabelle Agier; Ariane Szafarz
  2. Spatial Unemployment Differentials in Colombia By Ana Maria DIAZ ESCOBAR
  3. Choques não Antecipados de Política Monetária e a Estrutura a Termo das Taxas de Juros no Brasil By Fernando N. de Oliveira; Leonardo Ramos
  4. Biased Perceptions of Income Distribution and Preferences for Redistribution: Evidence from a Survey Experiment By Cruces, Guillermo; Perez Truglia, Ricardo; Tetaz, Martin
  5. Central banking in Latin America: changes, achievements, challenges By Klaus Schmidt-Hebbel

  1. By: Isabelle Agier; Ariane Szafarz
    Abstract: This paper estimates the impact of loan officers' subjectivity on microcredit granting by exploiting an exceptionally detailed database from a Brazilian microfinance institution. Loan officers collect field data, meet with applicants, and make recommendations to the credit committee that in turn has the final say on both loan approval and loan size. The loan officers' subjectivity is captured through the lens of disparate treatment based on gender. Indeed, our estimations show that an unfair gender gap is observed in loan size, and that this gap is almost exclusively attributable to the loan officers. We interpret this finding as evidence that, despite monitoring and wage incentivization, microcredit officers keep letting their subjective preferences interfere with loan granting. We conclude by suggesting alternative means to curb subjectivity in credit allocation to micro-entrepreneurs.
    Keywords: Subjectivity Loan Size; Microcredit; Gender; Loan Officer; Entrepreneurs
    JEL: O16 D82 J33 L31
    Date: 2011–05
  2. By: Ana Maria DIAZ ESCOBAR (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This paper studies the geographic distribution of unemployment rates in Colombian urban areas. It introduces measures of spatial correlation and spatial econometric techniques to analyze the dependence in local unemployment rates across municipalities. Results suggest that Colombian municipalities have experienced a polarization process between 1993 and 2005, as municipalities' unemployment rates have followed different evolutions relative to the National average. This process has been accompanied by the creation of unemployment clusters, that is to say, municipalities had very similar unemployment outcomes to those of their neighbors. This analysis uses a spatial Durbin model to explore the influence of various factors in determining differences in regional unemployment rates. According to our findings differences in labor demand, immigration rates, and urbanization are factors behind observed municipal unemployment disparities.
    Keywords: local labor markets, unemployment di erential, polarization, clustering, spatial econometrics, spatial Durbin model
    JEL: R23 C14 C23 C31
    Date: 2011–04–27
  3. By: Fernando N. de Oliveira; Leonardo Ramos
    Abstract: This paper has two objectives. One is to identify non anticipated monetary shocks using future contracts of DI. The second objective is to study the relation between these shocks and the term structure of interest rate. Our empirical evidence suggests that, albeit in a partial manner, the market anticipates most interest rate decisions of the Central Bank. We also show that, in general, non anticipated monetary shocks are capable of affecting the term structure of interest rates.
    Date: 2011–04
  4. By: Cruces, Guillermo (CEDLAS-UNLP); Perez Truglia, Ricardo (Harvard University); Tetaz, Martin (CEDLAS-UNLP)
    Abstract: Individual perceptions of income distribution play a vital role in political economy and public finance models, yet there is little evidence regarding their origins or accuracy. This study examines how individuals form these perceptions and posits that systematic biases arise from the extrapolation of information extracted from reference groups. A tailored household survey provides original evidence on the significant biases in individuals’ evaluations of their own relative position in the distribution. Furthermore, the data supports the hypothesis that the selection process into the reference groups is the source of those biases. Finally, this study also assesses the practical relevance of these biases by examining their impact on attitudes towards redistributive policies. An experimental design incorporated into the survey provides consistent information on the own ranking within the income distribution to a randomly selected group of respondents. Confronting agents’ biased perceptions with this information has a significant effect on their stated preferences for redistribution. Those who had overestimated their relative position and thought of themselves relatively richer than they were demand higher levels of redistribution when informed of their true ranking. This relationship between biased perceptions and political attitudes provides an alternative explanation for the relatively low degree of redistribution observed in modern democracies.
    Keywords: perceptions of income distribution, limited information, preferences for redistribution, field experiment
    JEL: D31 D83 H24 H53 I30
    Date: 2011–05
  5. By: Klaus Schmidt-Hebbel (Catholic Universty of Chile)
    Abstract: Latin America's central banks were strengthened in the 1990s by independence laws, adoption of new policy regimes (foremost inflation targeting), and more transparent policy decisions bound by ex-ante rules and ex-post accountability. Central bank modernization - supported by significant fiscal adjustment and financial-sector strengthening - led most Latin American countries to converge to one-digit inflation rates and contributed to higher and more stable growth than in the past. Yet the region's new policy framework was put to severe testing by the global financial crisis and recession. Quick and innovative policy responses by the region's central banks helped domestic financial systems and the real economy to resist well the massive financial and real consequences of the banking crisis and recession in industrial countries. Empirical evidence reported here shows that the central banks' new policy framework and policy response during the crisis dampened significantly the amplitude of the recession. Having weathered well the global financial crisis and recession, now Latin America's central banks face a large array of policy challenges, which are reviewed in this lecture. Some are common to central banks in industrial and emerging economies, derived from the crisis itself and the issues it poses for improving the role of central banks in attaining more effectively both monetary and financial stability. Other challenges are idiosyncratic to emerging economies in the region (and elsewhere) that are facing renewed growth, high commodity prices, large capital inflows, and real exchange-rate appreciation.
    Keywords: Monetary Policy, Central Banks, Latin America
    JEL: E52 E58 O54
    Date: 2011–05

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