New Economics Papers
on Central and South America
Issue of 2011‒06‒18
nine papers chosen by

  1. Sobre el nivel de reservas internacionales de Chile: análisis a partir de enfoques complementarios. By Gabriela Contreras; Alejandro Jara; Eduardo Olaberría; Diego Saravia
  2. Estimación del Premio por Riesgo en Chile By Francisca Lira; Claudia Sotz
  3. El Índice Cartera Vencida como Medida de Riesgo de Crédito: Análisis y Aplicación al Caso de Chile By Andrés Sagner
  4. Chile’s Fiscal Rule as Social Insurance By Eduardo Engel; Christopher Neilson; Rodrigo Valdés
  5. Análisis municipal de los determinantes de la deforestación en Bolivia By Javier Aliaga Lordemann; Horacio Villegas Quino; Jesús Mur; Daniel Leguía
  6. “Stay With Us?” The Impact of Emigration on Wages in Honduras By Jason Gagnon
  7. Effects of a Mortgage Interest Rate Subsidy: Evidence from Colombia By Marc Hofstetter; Jorge Tovar; Miguel Urrutia
  8. Skills, Exports, and the Wages of Seven Million Latin American Workers By Irene Brambilla; Rafael Dix Carneiro; Daniel Lederman; Guido Porto
  9. Impuestos negativos a la renta en Uruguay: ¿una política redistributiva alternativa? By Mery Ferrando; Cristian Pérez; Gonzalo Salas

  1. By: Gabriela Contreras; Alejandro Jara; Eduardo Olaberría; Diego Saravia
    Abstract: This paper analyzes the recent evolution and the actual level of international reserves in Chile using complementary approaches. First, we compare the current level of international reserves of Chile with other countries, using as controls a set of indicators that are traditionally used in the literature. Then, we compare the current level of international reserves with the estimation from panel regressions and with the level suggested by theoretical models of optimal demand of reserves. The exercises show that, during the period of floating exchange rate the level of reserves in Chile has been adequate for reasonable levels of risk suggested by theoretical models. However, by the end of this period, its level is below the levels observed in other emerging countries with floating exchange rate regimes.
    Date: 2011–02
  2. By: Francisca Lira; Claudia Sotz
    Abstract: This study describes the different methodologies to measure the equity risk premium (ERP) and, in specific, the ERP for Chile between January 1993 and May 2010. The first one was estimate the historical difference in annual returns of stocks over bonds, which gave an ERP in the range of 2.8% and 6.7%, depending on the choice of the stock index and risk free security. On the other hand, and as an alternative to the first methodology, calculated the return on stocks based on current equity prices using a dividend discount model, which resulted in an ERP in a range of 4.9%> to 7.2%, depending on the type of risk free security considered. Finally, the authors added Chilean sovereign risk to the base premium for matured equity markets, obtaining an ERP between 3.7% and 7.6%.
    Date: 2011–02
  3. By: Andrés Sagner
    Abstract: This paper proposes the non-performing loans (NPL) ratio, defined as the change in the stock of NPL adjusted by write-offs and standardized by loans, as the main measure to be used for modeling the credit risk of the Chilean banking system. In particular, the paper identifies certain statistical and conceptual advantages of this measure with respect to loan loss provisions (LLP), which support this idea. First, the NPL ratio by type of credit covers a greater time span than LLP. Second, the forward-looking nature of LLP –one of its main advantages over the NPL ratio– is applicable only from 2004 onward due to various changes in Chilean reporting standards. Third, LLP is discretionary because provisioning is made on the basis of relative risk aversion of banks. Fourth, the NPL ratio produces smoother series than LLP for consumer and mortgage loans. In addition, the dynamic structure observed in both time series does not differ significantly. The econometric model estimated for the period January 1997 to June 2010 shows that the NPL ratio has statistically significant relations with macroeconomic aggregates such as the annual output growth, the short and long term interest rates, the annual inflation rate, the peso-dollar exchange rate, and the surprises in credit growth. Finally, the out-of-sample forecasts indicate differences between the actual and projected NPL ratios that are economically significant only in the case of mortgage credit. For the remaining portfolios, the evolution of this ratio during the period of July 2008 to June 2010 does not differ significantly from that predicted by the econometric model.
    Date: 2011–03
  4. By: Eduardo Engel; Christopher Neilson; Rodrigo Valdés
    Abstract: We explore the role of fiscal policy over the business cycle from a normative perspective, for a government with a highly volatile and exogenous revenue source. Instead of resorting to Keynesian mechanisms, in our framework fiscal policy plays a role because the government provides transfers to heterogeneous households facing volatile income, albeit with an imperfect transfer technology (a fraction of transfers leak to richer households). We calibrate the model to Chile’s highly volatile government revenues derived from copper, and characterize the optimal fiscal reaction. We quantify the welfare gains vis-à-vis a balanced budget rule, and the degree of adequate fiscal countercyclicality. We also analyze simpler rules, such as the structural balance rule in place in Chile during the last decade, more general linear rules, and linear rules with an escape clause. We find that the optimal rule leads to the same welfare gain as doubling the government’s copper revenues under a balanced budget rule. Chile’s structural balance rule achieves 18% of these gains, while a linear rule with an escape clause achieves 83% of the gains. The degrees of countercyclicality of the optimal rule and the linear rule with an escape clause are similar, and much larger than those of the structural balance rule.
    Date: 2011–05
  5. By: Javier Aliaga Lordemann (Instituto de Investigaciones Socio-Económicas. Universidad Católica Boliviana); Horacio Villegas Quino (Instituto de Investigaciones Socio-Económicas. Universidad Católica Boliviana); Jesús Mur (Departamento de Análisis Económico. Universidad de Zaragoza); Daniel Leguía (Instituto de Investigaciones Socio-Económicas. Universidad Católica Boliviana)
    Abstract: Este documento presenta evidencias de que las características ambientales, la infraestructura vial, los derechos propietarios y los aspectos demográficos son determinantes de la deforestación en Bolivia. Para ello, se realizaron estimaciones por mínimos cuadrados ordinarios y posteriormente se comprobó la existencia de interdependencia entre las regiones examinadas, estimándose en este último caso un modelo espacial de retardos.
    Keywords: Bolivia, Deforestación y Econometría Espacial
    JEL: C01 L73
    Date: 2011–02
  6. By: Jason Gagnon
    Abstract: While the econometric literature on the impact of immigration on labour markets is well developed, there is a striking gap with regards to the impact of emigration on sending countries. Building on the established literature measuring the impact of immigration, this paper attempts to narrow that gap by investigating whether the short but intense emigration period from Honduras from 2001 to 2007 to the U.S. increased wages in Honduras. It notably exploits the variation of labour supply by skill group in the labour market in the years following Hurricane Mitch. Relying on individual cross-sectional data and an instrumental variable approach, the estimates show that a 10% increase in emigration from Honduras increased wages in Honduras by around 10%, an increase which is higher than previous findings in other countries – but diminishing over time. It also provides evidence on implications in terms of redistribution by gender, rural/urban households and private sector workers.<BR>Alors que la littérature économique portant sur l’impact de l’immigration sur les marchés du travail est largement développée, il existe un déficit notable concernant l’impact de l’émigration sur le pays d’origine. A partir de la littérature mesurant l’impact de l’immigration, cet article vise à combler ce déficit en étudiant si la période d’émigration, à la fois courte mais intense, entre le Honduras et les États-Unis de 2001 à 2007 a entraîné une augmentation des salaires au Honduras. Il exploite notamment la variation d’offre de travail par groupe de compétences sur le marché du travail pour les années suivant l’ouragan Mitch. Fondées sur des données transversales individuelles et une approche reposant sur des variables instrumentales, les estimations montrent qu’une augmentation de 10% de l’émigration provenant du Honduras accroit les salaires honduriens de près de 10%, une augmentation supérieure à des résultats antérieurs pour d’autres pays – mais qui diminue au cours du temps. Les implications en termes de redistributions au niveau du genre, des ménages ruraux/urbains et des travailleurs privés sont aussi développées.
    Keywords: development, wages, international emigration, labour force, Honduras, Central America, développement, salaires, émigration internationale, force de travail, Honduras, Amérique Centrale
    JEL: E24 F22 J21
    Date: 2011–06–07
  7. By: Marc Hofstetter; Jorge Tovar; Miguel Urrutia
    Abstract: Government intervention in the construction sector as a way to boost the economy has been a constant in Colombia for the past 90 years. This paper explicitly tests the impact of the most recent of such interventions: a subsidy to the mortgage interest rate. Our results show that the subsidy boosted mortgage loans by around 38 percent. However, we also find that real interest rates went up by 1.09 percent, i.e., there has been an incomplete pass through of the subsidy to the consumer. We estimate the pass-through of such intervention to be in the range of 65 percent to 74 percent.
    Date: 2011–05–09
  8. By: Irene Brambilla (Universidad Nacional de La Plata, Universidad de San Andrés y NBER); Rafael Dix Carneiro (Princeton University); Daniel Lederman (The World Bank); Guido Porto (Universidad Nacional de La Plata)
    Abstract: The returns to schooling and the skill premium are key parameters in various elds and policy debates, including the literatures on globalization and inequality, international migration, and technological change. This paper explores the skill premium and its correlation with exports in Latin America, thus linking the skill premium to the emerg- ing literature on the structure of trade and development. Using data on employment and wages for over seven million workers from sixteen Latin American economies, the authors estimate national and industry-specic returns to schooling and skill premi- ums and study some of their determinants. The evidence suggests that both country and industry characteristics are important in explaining returns to schooling and skill premiums. The analyses also suggest that the incidence of exports within industries, the average income per capita within countries, and the relative abundance of skilled workers are related to the underlying industry and country characteristics that explain these parameters. In particular, sectoral exports are positively correlated with the skill premium at the industry level, a result that supports recent trade models linking exports with wages and the demand for skills.
    Keywords: industry skill premium, industry exports, Latin America
    JEL: F13 F14
    Date: 2011–06
  9. By: Mery Ferrando (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Cristian Pérez; Gonzalo Salas (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: In this research we evaluate an alternative redistributive scheme for Uruguay. Specifically,we analyze the impacts on equity and efficiency of substituting the new conditional cash transfer program (Asignaciones Familiares – AFAM-) and direct taxes (personal income tax–IRFP-) by a negative income tax (INR), holding fiscal budget constant. Using microsimulations that incorporate behavioral changes, we analyze the effects of this policy change on labor supply, poverty levels and income distribution. The results show that the introduction of an INR, as designed in this study, would not have a redistributive impact higher than the current scheme. Moreover, in terms of efficiency, the policy change would have practically no impact on labor supply.
    Keywords: Negative income tax, labor supply, income
    JEL: I38 H53 J22 H23
    Date: 2010–09

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