New Economics Papers
on Central and South America
Issue of 2012‒09‒03
nine papers chosen by

  1. Latin American Exchange Rate Dependencies: A Regular Vine Copula Approach By Rubén Albeiro Loaiza Maya; Luis Fernando Melo Velandia
  2. The Impact of Taxes and Social Spending on Inequality and Poverty in Argentina, Bolivia, Brazil, Mexico and Peru: A Synthesis of Results By Nora Lustig; George Gray Molina; Sean Higgins; Miguel Jaramillo; Wilson Jimenez; Veronica Paz; Claudiney Pereira; Carola Pessino; John Scott; Ernesto Yanez
  3. Regional Monetary Cooperation in Latin America By Ocampo, José Antonio; Titelman, Daniel
  4. Long-Run Money Demand in Latin-American countries: A Nonestationary Panel Data Approach By Carrera, Cesar
  5. Brazil - Social policy, perceptions and the press : an analysis of the media's treatment of conditional cash transfers in Brazil By Lindert, Kathy; Vincensini, Vanina
  6. La sostenibilidad financiera del Sistema de Salud Colombiano – Dinámica del gasto y principales retos de cara al futuro By Jairo Núñez Méndez; Juan Gonzalo Zapata; Carlos Castaneda; Sandra Milena Fonseca
  7. Adjustment patterns to commodity terms of trade shocks: the role of exchange rate and international reserves policies By Aizenman, Joshua; Edwards, Sebastian; Riera-Crichton, Daniel
  8. Equity in tertiary education in Central America : an overview By Bashir, Sajitha; Luque, Javier
  9. Sailing through the Global Financial Storm: Brazil's recent experience with monetary and macroprudential policies to lean against the financial cycle and deal with systemic risks. By Luiz Awazu Pereira da Silva; Ricardo Eyer Harris

  1. By: Rubén Albeiro Loaiza Maya; Luis Fernando Melo Velandia
    Abstract: This study implements a regular vine copula methodology to evaluate the level of contagion among the exchange rates of six Latin American countries (Argentina, Brazil, Chile, Colombia, Mexico and Peru) from June 2005 to April 2012. We measure contagion in terms of tail dependence coefficients, following Fratzscher’s [1999] definition of contagion as interdependence. Our results indicate that these countries are divided into two blocs. The first bloc consists of Brazil, Colombia, Chile and Mexico, whose exchange rates exhibit the largest dependence coefficients, and the second bloc consists of Argentina and Peru, whose exchange rate dependence coefficients with other Latin American countries are low. We also found that most of the Latin American exchange rate pairs exhibit asymmetric behaviors characterized by non-significant upper tail dependence and significant lower tail dependence. These results imply that there exists contagion in Latin American exchange rates in periods of large appreciations
    Date: 2012–08–23
  2. By: Nora Lustig (Department of Economics, Tulane University); George Gray Molina (Chief Economist for UNDP-Latin America and the Caribbean, New York, New York); Sean Higgins (Department of Economics, Tulane University); Miguel Jaramillo (GRADE (Grupo de Análisis para el Desarrollo), Peru); Wilson Jimenez; Veronica Paz; Claudiney Pereira (Department of Economics, Tulane University); Carola Pessino (School of Government and Executive Director, Centro de Investigaciones y Evaluación en Economía Social para el Alivio de la Pobreza, Universidad Torcuato Di Tella, Buenos Aires, Argentina); John Scott (CIDE (Centro de Investigación y Docencia Económicas), Mexico and,Consejero Académico, CONEVAL (Consejo Nacional de Evaluación de la Política de Desarrollo Social), Mexico); Ernesto Yanez
    Abstract: We apply a standard tax and benefit incidence analysis to estimate the impact on inequality and poverty of direct taxes, indirect taxes and subsidies, and social spending (cash and food transfers and in-kind transfers in education and health). The extent of inequality reduction induced by direct taxes and transfers is rather small (2 percentage points on average) especially when compared with that found in Western Europe (15 percentage points on average). What prevents Argentina, Bolivia and Brazil from achieving similar reductions in inequality is not the lack of revenues but the fact that they spend less on cash transfers-especially transfers that are progressive in absolute terms--as a share of GDP. Indirect taxes result in that net contributors to the fiscal system start at the fourth, third and even second decile on average, depending on the country. When in-kind transfers in education and health are added, however, the bottom six deciles are net recipients. The impact of transfers on inequality and poverty reduction could be higher if spending on direct cash transfers that are progressive in absolute terms is increased, leakages to the nonpoor are reduced and coverage of the extreme poor by direct transfer programs is expanded.
    Keywords: fiscal incidence, inequality, poverty, taxes, social spending, Latin America
    JEL: D31 D63 H11 H22 H5 I14 I24 I3 O15
    Date: 2012–08
  3. By: Ocampo, José Antonio (Asian Development Bank Institute); Titelman, Daniel (Asian Development Bank Institute)
    Abstract: Latin American has the longest history of regional integration efforts in the developing world. This paper analyzes the experience of regional monetary cooperation in Latin America over the past three decades. This experience has been overall successful but also uneven, both in terms of country coverage and services provided. Although strictly not a form of monetary cooperation, development financing does play a useful complementary role by proving counter-cyclical or at least stable financing during crises, when private financing for developing countries dries up.
    Keywords: regional monetary cooperation; latin america; regional integration; development financing
    JEL: O23 O54
    Date: 2012–08–13
  4. By: Carrera, Cesar (Banco Central de Reserva del Perú)
    Abstract: Central banks have long been interested in obtaining precise estimations of money demand given the fact that the evolution of money demand plays a key role over several monetary variables. I use Pedroni's (2002) Fully Modified Ordinary Least Square (FMOLS) to estimate the coefficients of the long-run money demand function for 15 Latin-American countries. The FMOLS technique pool information regarding common long-run relationships while allowing the associated short-run dynamics and fixed effects to be heterogeneous across different members of the panel. For this group of countries, I find evidence of a cointegrating money demand, an income elasticity of 0.94, and an interest-rate semi-elasticity of -0.01.
    Keywords: Money demand, panel cointegration, FMOLS, Latin-American
    JEL: C22 C23 E41
    Date: 2012–08
  5. By: Lindert, Kathy; Vincensini, Vanina
    Abstract: This report analyzes perceptions about Conditional Cash Transfers (CCTs) as portrayed and debated in free and independent press in Brazil. The motives behind the study are to contribute to an understanding of the public debate about this type of social policy instrument, given its widespread popularity and potential to reduce poverty and inequality and the replication of this type of instrument in many countries around the world. It examines the tenor of this public debate at two levels: (a) the macro level, looking at overall press coverage and the tone of media articles towards CCTs in Brazil; and (b) the micro level, digging deeper into the media treatment of technical design and implementation features.
    Keywords: Information Security&Privacy,Population Policies,Public Sector Corruption&Anticorruption Measures,Technology Industry,Educational Technology and Distance Education
    Date: 2010–12–01
  6. By: Jairo Núñez Méndez; Juan Gonzalo Zapata; Carlos Castaneda; Sandra Milena Fonseca
    Abstract: "El presente trabajo analiza cuál ha sido el desarrollo del financiamiento de la salud en Colombia a lo largo de los últimos años, e implícitamente busca entender la evolución de los diferentes regímenes que se han consolidado en este proceso. Por tal razón, se describe el desarrollo de los tres regímenes identificados: contributivo, subsidiado y regímenes especiales."
    Date: 2012–07–29
  7. By: Aizenman, Joshua; Edwards, Sebastian; Riera-Crichton, Daniel
    Abstract: We analyze the way in which Latin American countries have adjusted to commodityterms of trade (CTOT) shocks in the 1970-2007 period. Specifically, we investigate the degreeto which the active management of international reserves and exchange rates impacted thetransmission of international price shocks to real exchange rates. We find that active reservemanagement not only lowers the short-run impact of CTOT shocks significantly, but alsoaffects the long-run adjustment of REER, effectively lowering its volatility. We also show thatrelatively small increases in the average holdings of reserves by Latin American economies (tolevels still well below other emerging regions current averages) would provide a policy tool aseffective as a fixed exchange rate regime in insulating the economy from CTOT shocks.Reserve management could be an effective alternative to fiscal or currency policies forrelatively trade closed countries and economies with relatively poor institutions or highgovernment debt. Finally, we analyze the effects of active use of reserve accumulation aimedat smoothing REERs. The result support the view that “leaning against the wind†is potent, butmore effective when intervening to support weak currencies rather than intervening to slowdown the pace of real appreciation. The active reserve management reduces substantiallyREER volatility.
    Keywords: Economics, Terms of trade, the real exchange rate, international reserves, commodity price shocks, volatility,, exchange rate regime
    Date: 2012–01–10
  8. By: Bashir, Sajitha; Luque, Javier
    Abstract: This paper analyzes the evolution in socio-economic and ethnic disparities in tertiary education attainment, participation, and completion and labor market outcomes in the six countries of Central America. There is evidence of differential progress, with Costa Rica, a middle-income country, and Nicaragua, a low-income country, having improved participation of low-income students in tertiary education, while this continues to be negligible in Guatemala, El Salvador, and Honduras. Wide differentials in salaries linked to socio-economic background can signal differences in the quality of tertiary education or prior educational experiences. The analysis distinguishes between long-term and short-term constraints and the key transitions in the education cycle that impede access to tertiary education. The main obstacle to accessing tertiary education for poor students is the failure to either start or complete secondary education, suggesting different priorities for different countries in addressing long-term constraints. However, problems also arise within tertiary education, as in all countries the average tertiary education completion rate is below 50 percent, with even lower rates for students from low-income families and indigenous backgrounds. The paper uses an OECD framework for public policies for promoting equity in tertiary education to assess policies in Central American countries and concludes that many of them currently lack the policies, instruments, and institutional mechanisms to promote greater equity in tertiary education. The paper highlights how valuable insights can be obtained from analysis of household survey data in the absence of comprehensive data on tertiary education which is typical of many developing countries.
    Keywords: Access&Equity in Basic Education,Tertiary Education,Teaching and Learning,Gender and Education,Education For All
    Date: 2012–08–01
  9. By: Luiz Awazu Pereira da Silva; Ricardo Eyer Harris
    Abstract: Brazil sailed well through the global financial storm, using counter-cyclical policies to engineer its fast V-shaped recovery in 2010. In order to deal with inflationary pressures arising from its strong recovery, after the peak of the crisis, it used standard aggregate demand management instruments (tight fiscal and monetary policies). Brazil had also to deal with the post-QE global environment of excess liquidity in 2010-2011 where excessive capital inflows were exacerbating domestic credit growth with potentially destabilizing effects for price and financial stability. In that front, Brazil maintained and strengthened its strong financial sector regulation and supervision to continue to ensure financial stability, in particular, using a set of macroprudential instruments. While combining monetary and macroprudential instruments to lean against the financial cycle, the Central Bank of Brazil has always made clear that macroprudential measures are not a substitute for monetary policy action and are primarily geared at addressing financial stability risks. In fact, many policy makers after the global financial crisis seem to see now a complementarity between macroprudential measures and monetary policy. Accordingly, the (new) separation principle seems to evolve into using two instruments (the central bank’s base rate and a set of macroprudential tools) to address two objectives (the inflation target and a composite set of financial stability indicators). Brazil’s recent experience with monetary and macroprudential policies is a successful example of this new approach. More time and other countries’ experiences are needed to assess properly if this policy option can be generalized and replicated with similar results elsewhere.
    Date: 2012–08

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