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on Central and South America |
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Issue of 2013‒03‒23
six papers chosen by |
| By: | Luis Felipe Cespedes; Roberto Chang; Andres Velasco |
| Abstract: | This paper reviews the recent experience of a half-dozen Latin American inflation targeting (IT) nations. Repeated and large deviations from the standard IT framework are documented: 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 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. A first evaluation of the emerging modified framework of monetary policy is also attempted. 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: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:idb-wp-384&r=lam |
| By: | Raul Ramos (Faculty of Economics, University of Barcelona); Juan Carlos Duque (RiSE-group, Department of Economics, EAFIT University); Sandra Nieto (Faculty of Economics, University of Barcelona) |
| Abstract: | Despite the large number of studies that draw on Programme for International Student Assessment (PISA) microdata in their analyses of the determinants of educational outcomes, no more than a few consider the relevance of geographical location. In going some way to rectify this, our paper examines the differences in educational outcomes between students attending schools in rural areas and those enrolled in urban schools. We use microdata from the 2006 and 2009 PISA survey waves for Colombia. The Colombian case is particularly interesting in this regard due to the structural changes suffered by the country in recent years, both in terms of its political stability and of the educational reform measures introduced. Our descriptive analysis of the data shows that the educational outcomes of rural students are worse than those of urban students. In order to identify the factors underpinning this differential, we use the Oaxaca-Blinder decomposition and then exploit the time variation in the data using the methodology proposed by Juhn-Murphy-Pierce. Our results show that most of the differential is attributable to family characteristics as opposed to those of the school. From a policy perspective, our evidence supports actions addressed at improving conditions in the family rather than measures of positive discrimination of rural schools. |
| Keywords: | educational outcomes, rural-urban differences, decomposition methods. JEL classification: J24, I25, R58 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:ira:wpaper:201223&r=lam |
| By: | Leopoldo Fergusson; Juan F. Vargas |
| Abstract: | This paper studies the effect of strengthening democracy, as captured by an increase in voting rights, on the incidence of violent civil conflict in nineteenth-century Colombia. Empirically studying the relationship between democracy and conflict is challenging, not only because of conceptual problems in defining and measuring democracy, but also because political institutions and violence are jointly determined. We take advantage of an experiment of history to examine the impact of one simple, measurable dimension of democracy (the size of the franchise) on conflict, while at the same time attempting to overcome the identification problem. In 1853, Colombia established universal male suffrage. Using a simple difference-indifferences specification at the municipal level, we find that municipalities where more voters were enfranchised relative to their population experienced fewer violent political battles while the reform was in effect. The results are robust to including a number of additional controls. Moreover, we investigate the potential mechanisms driving the results. In particular, we look at which components of the proportion of new voters in 1853 explain the results, and we examine if results are stronger in places with more political competition and state capacity. We interpret our findings as suggesting that violence in nineteenth-century Colombia was a technology for political elites to compete for the rents from power, and that democracy constituted an alternative way to compete which substituted violence. |
| Date: | 2013–02–28 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:010584&r=lam |
| By: | Román David Zárate |
| Abstract: | The interaction between family size and children quality has been a recurring topic in the economics of family. However, there is scarce evidence in Latin America, and the literature has not yet explored new mechanisms to explain either positive or null effects of an additional sibling found by different authors in the last ten years. This article addresses these two issues. On the one hand, I construct a simple theoretical model which rationalizes negative and positive effects of an additional sibling due to family interactions. On the other hand, I estimate the effect of family size in Colombia on school lag, school attendance, school dropout and child labor. I use data from the Demographic and Health survey and construct a set of instruments based on the report of the ideal number of children. The novelty of the instruments lies in that unlike most articles which can only estimate the effect from two siblings onwards, I can estimate the effect of a first sibling. I find that for first (second) born children a first (second) sibling generates null or positive effects on the four outcomes but there are negative effects from two (three) siblings onwards on the four outcomes. |
| Date: | 2013–02–27 |
| URL: | http://d.repec.org/n?u=RePEc:col:000089:010588&r=lam |
| By: | Nestor Gandelman; Alejandro Rasteletti |
| Abstract: | This paper explores whether the extent of informality in a sector affects a firm's investment decision directly or indirectly through a credit availability channel. The dataset used in the estimation of the econometric models consists of an unbalanced panel of Uruguayan firms for the period 1997-2008. The results suggest that financial restrictions affect investment decisions in Uruguay, as an increase in credit to the private sector translates into higher investment rates. A one percentage point increase in overall credit growth translates into a one half percent increase in investment rates. It is also found that, although there is no direct effect of informality on the firm investment decision, there is an indirect effect through the borrowing channel. More specifically, financial restrictions reduce the amount of investment undertaken by Uruguayan firms, the effect being smaller if the firm operates in a sector with lower informality. |
| JEL: | E26 G21 O16 O4 |
| Date: | 2013–03 |
| URL: | http://d.repec.org/n?u=RePEc:idb:wpaper:idb-wp-392&r=lam |
| By: | Paolo Brunori (University of Bari); Francisco H. G. Ferreira (The World Bank); Vito Peragine (University of Bari) |
| Abstract: | Despite a recent surge in the number of studies attempting to measure inequality of opportunity in various countries, methodological differences have so far prevented meaningful international comparisons. This paper presents a comparison of ex-ante measures of inequality of economic opportunity (IEO) across 41 countries, and of the Human Opportunity Index (HOI) for 39 countries. It also examines international correlations between these indices and output per capita, income inequality, and intergenerational mobility. The analysis finds evidence of a “Kuznets curve” for inequality of opportunity, and finds that the IEO index is positively correlated with overall income inequality, and negatively with measures of intergenerational mobility, both in incomes and in years of schooling. The HOI is highly correlated with the Human Development Index, and its internal measure of inequality of opportunity yields very different country rankings from the IEO measure |
| Keywords: | Equality of opportunity, income inequality, social mobility. |
| JEL: | D71 D9 I32 |
| Date: | 2013–01 |
| URL: | http://d.repec.org/n?u=RePEc:inq:inqwps:ecineq2013-284&r=lam |