New Economics Papers
on Central and South America
Issue of 2011‒08‒29
seven papers chosen by

  1. The Curse of the Elders? Aid Effectiveness and Gerontocracy in Developing Countries By Marc Raffinot; Baptiste Venet
  2. Inequality and poverty under Latin America’s new left regimes By Darryl McLeod; Nora Lustig
  3. Inequality of opportunity in educational achievement in Latin America: Evidence from PISA 2006-2009 By Luis Fernando Gamboa; Fábio D. Waltenberg
  4. The rise and fall of income inequality in Latin America By Leonardo Gasparini; Nora Lustig
  5. How Will the Food Price Shock Affect Inflation in Latin America and the Caribbean? By Eduardo Lora; Andrew Powell; Pilar Tavella
  6. Early Childhood Stimulation Interventions in Developing Countries: A Comprehensive Literature Review By Helen Baker-Henningham; Florencia López Bóo
  7. A Political Theory of Populism By Daron Acemoglu; Georgy Egorov; Konstantin Sonin

  1. By: Marc Raffinot (LEDa, UMR DIAL-Paris-Dauphine); Baptiste Venet (LEDa, UMR DIAL-Paris-Dauphine)
    Abstract: (english) In this paper we use a simple standard overlapping-generation model to assess the impact of foreign aid. Because of deference to the elders, donors are not able to modify the sharing out of aid between the old and the young in the recipient economy. The model shows that, if aid is considered as a device intended to help attain the spontaneous steady state of the economy, it may lead to a rise or fall in savings, and hence in the growth rate of the economy, depending on a threshold share of aid accruing to elders. Alternately, if aid is intended to help the economy to reach its golden-rule steady state, the relevant level of aid increases with the share of aid accruing to elders, up to a certain threshold. If this share is higher than the threshold, the optimal level of aid is negative. _________________________________ (français) Nous utilisons un modèle à générations imbriquées pour montre que la répartition de l’aide entre jeunes et vieux peut avoir un impact sur l’efficacité de l’aide en termes d’épargne, de croissance et de bien-être. Les sociétés en développement sont généralement marquées par une « déférence pour les anciens » profondément ancrée dans la culture traditionnelle. Nous supposons que les donateurs sont incapables de manipuler cette part, et nous montrons que la part de l’aide qui revient aux vieux a un impact sur la croissance et le bien-être positif en dessous d’un certain seuil et négatif au-delà.
    Keywords: Developing Countries, Elders, Aid effectiveness, Overlapping Generations Models.
    JEL: E61 F35 F43 O11 O19
    Date: 2011–01
  2. By: Darryl McLeod (Fordham University); Nora Lustig (Tulane University and Center for Global Development)
    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. The left populists regimes such as 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. Moreover, 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: inequality, poverty, social policy, new left, Latin America.
    JEL: D31 D33 I32 I38 O15 O54 P16
    Date: 2011
  3. By: Luis Fernando Gamboa (Universidad del Rosario, Colombia); Fábio D. Waltenberg (Universidade Federal Fluminense, Brazil)
    Abstract: We assess inequality of opportunity in educational achievement in six Latin American countries, employing two waves of PISA data (2006 and 2009). By means of a non-parametric approach using a decomposable inequality index, GE(0), we rank countries according to their degree of inequality of opportunity. We work with alternative characterizations of types: school type (public or private), gender, parental education, and combinations of those variables. We calculate ?incremental contributions? of each set of circumstances to inequality. We provide rankings of countries based on unconditional inequalities (using conventional indices) and on conditional inequalities (EOp indices), and the two sets of rankings do not always coincide. Inequality of opportunities ranges from less than 1% to up to 27%, with substantial heterogeneity according to the year, the country, the subject and the specification of circumstances. Robustness checks based on bootstrap and the use of an alternative index confirm most of the initial results.
    Keywords: Inequality of Opportunity, economics of education, Latin America.
    JEL: D63 O15
    Date: 2011
  4. By: Leonardo Gasparini (CEDLAS, Universidad de La Plata); Nora Lustig (Tulane University and Center for Global Development)
    JEL: D31 D33 H53 J48 O15 O54
    Date: 2011
  5. By: Eduardo Lora; Andrew Powell; Pilar Tavella
    Abstract: There is widespread concern that recent increases in international food prices may have significant effects on domestic food prices and inflation. This note assesses the impact of the recent food price shock on food, non-food and consumer inflation in the countries of Latin American and the Caribbean (LAC). Vector Autoregressive Regressions (VARs) are estimated for each country to trace the effect of international food prices, the price of oil and the value of the US dollar on domestic prices. The results are then used to calculate the potential impact of higher food prices and to project the expected rise in domestic prices to the end of 2011 and beyond, given the actual increase in food prices until February 2011. It is concluded that, due to the food price surge, increases in inflation could exceed 5 percentage points in Bolivia, Dominican Republic, Guatemala and Honduras unless additional policy actions are taken. In some countries with flexible exchange rate systems, such as Brazil, Colombia and Mexico, currencies tend to appreciate as a response to higher food prices and as a result the impact on domestic prices is muted. However, there is no simple pattern of differences between floaters and fixers; the speed and extent of pass-through is quite heterogeneous and dependent on factors such as the importance of food in the overall inflation index and local policy measures.
    JEL: E37 F41 F47
    Date: 2011–04
  6. By: Helen Baker-Henningham; Florencia López Bóo
    Abstract: This report reviews the effectiveness of early childhood stimulation interventions in developing countries. The report aims to answer the questions: What works in terms of early stimulation for young children in developing countries? For whom and under what conditions do these programs work and why do they work.
    Keywords: Social Development :: Youth & Children, Education :: Early Childhood Education, Health :: Health Care
    Date: 2010–09
  7. By: Daron Acemoglu; Georgy Egorov; Konstantin Sonin
    Abstract: When voters fear that politicians may have a right-wing bias or that they may be influenced or corrupted by the rich elite, signals of true left-wing conviction are valuable. As a consequence, even a moderate politician seeking reelection chooses “populist’ policies - i.e., policies to the left of the median voter - as a way of signaling that he is not from the right. Truly right-wing politicians respond by choosing more moderate, or even left-of-center policies. This populist bias of policy is greater when the value of remaining in office is higher for the politician; when there is greater polarization between the policy preferences of the median voter and right-wing politicians; when politicians are indeed more likely to have a hidden right-wing agenda; when there is an intermediate amount of noise in the information that voters receive; when politicians are more forward-looking; and when there is greater uncertainty about the type of the incumbent. We show that similar results apply when some politicians can be corrupted or influenced through other non-electoral means by the rich elite. We also show that ‘soft term limits’ may exacerbate, rather than reduce, the populist bias of policies.
    JEL: C71 D71 D74
    Date: 2011–08

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