New Economics Papers
on Central and South America
Issue of 2012‒12‒15
three papers chosen by

  1. Is Inflation Targeting Still On Target? By Luis Felipe Céspedes; Roberto Chang; Andrés Velasco
  2. Equality of educational opportunity employing PISA data: Taking both achievement and access into account By Márcia de Carvalho; Luis Fernando Gamboa; Fábio D. Waltenberg
  3. Changing Social Contracts: Beliefs and Dissipative Inclusion in Brazil By Lee J. Alston; Marcus Melo; Bernardo Mueller; Carlos Pereira

  1. By: Luis Felipe Céspedes; Roberto Chang; Andrés Velasco
    Abstract: This paper reviews the recent experience of a half-dozen Latin American inflation-targeting (IT) nations. We document repeated and large deviations from the standard IT framework: exchange market interventions have been lasting and widespread; the real exchange rate has often become a target of policy, though this target is seldom made explicit; a range of other non-conventional policy tools, especially changes in reserve requirements but occasionally also taxes or restrictions on international capital movements, also came into common use. As in developed nations, during the 2008-2009 crisis issues of liquidity provision took center stage. We also attempt a first evaluation of the emerging modified framework of monetary policy. In general terms, the new approach seems to have been effective, at the very least since the region weathered the crisis reasonably well. But also, and perhaps more importantly, many questions remain about the desirability of non-conventional monetary policies in Latin America.
    JEL: E52 E58 F41
    Date: 2012–11
  2. By: Márcia de Carvalho; Luis Fernando Gamboa; Fábio D. Waltenberg
    Abstract: Abstract: While PISA datasets have been used for measuring inequality of educational opportunity they have important limitations: (i) samples only cover a relatively limited fraction of developing countries’ cohorts of 15-year-olds, and (ii) such fractions are not uniform across countries and waves. This casts doubts on the reliability of such measures when used for international and intertemporal comparisons: a milder calculated inequality of opportunity in a given country at a given moment might simply be the artifact of a more restricted and homogeneous sample. Previous attempts of addressing this problem have focused on explicitly reconstructing full samples. Here an alternative path is followed, relying on bidimensional indices, in which equality of opportunity in achievement is the first dimension and equality of opportunity for access to the exam is the second one. We compute the two dimensions and aggregate them using alternative techniques. Employing PISA 2006/2009 data for six Latin-American countries we observe rank reversals when comparing results based upon our indices and those based upon conventional indices of equality of opportunity for achievement. We then generalize our approach allowing for more dimensions and parameterizing the dimensions’ weights. Resumen: La medición de la desigualdad de oportunidades con las bases de PISA implican varias limitaciones: (i) la muestra sólo representa una fracción limitada de las cohortes de jóvenes de 15 años en los países en desarrollo y (ii) estas fracciones no son uniformes entre países ni entre periodos. Lo anterior genera dudas sobe la confiabilidad de estas mediciones cuando se usan para comparaciones internacionales: mayor equidad puede ser resultado de una muestra más restringida y más homogénea. A diferencia de enfoques previos basados en reconstrucción de las muestras, el enfoque del documento consiste en proveer un índice bidimensional que incluye logro y acceso como dimensiones del índice. Se utilizan varios métodos de agregación y se observan cambios considerables en los rankings de (in) equidad de oportunidades cuando solo se observa el logro y cuando se observan ambas dimensiones en las pruebas de PISA 2006/2009. Finalmente se propone una generalización del enfoque permitiendo otras dimensiones adicionales y otros pesos utilizados en la agregación
    Date: 2012–11–26
  3. By: Lee J. Alston; Marcus Melo; Bernardo Mueller; Carlos Pereira
    Abstract: Social contracts about inequality and redistribution are country-specific. We rely on a model of inequality and redistribution where multiple steady states can emerge in given country. We link the model to the recent literature on beliefs and argue that beliefs are a major determinant of which equilibrium results. We show that changes in beliefs may shift the equilibrium in a country over time. We present evidence that beliefs are typically very stable over time, yet argue that Brazil has recently undergone a dramatic shift in beliefs which we show is associated with a change in the country's social contract in the past thirty years. The transition from one social contract to another has taken place through a process which we call 'dissipative inclusion', where redistribution and social inclusion are effectively achieved but accompanied by distortions, inefficiencies and rent dissipation.
    JEL: O10 O43 P51
    Date: 2012–12

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