New Economics Papers
on Central and South America
Issue of 2013‒03‒30
six papers chosen by

  1. Do foreign portfolio flows increase risk in emerging stock markets? Evidence from six Latin American countries 1999 -2008 By Diego Alonso Agudelo Rueda; Milena Castaño
  2. Social Spending, Taxes and Income Redistribution in Paraguay By Sean Higgins; Nora Lustig; Julio Ramirez; Billy Swanson
  3. Waves and determinants in the activity of Mergers and Acquisitions: The Case of Latin America By Lina M. Cortés; Diego A. Agudelo; Samuel Mongrut
  4. Left, right, left: income, learning and political dynamics By Morrow, John; Carter, Michael
  5. Global dynamic timelines for IPRs harmonization against software piracy By Andrés, Antonio R; Asongu , Simplice A
  6. Interconexión eléctrica Colombia-Panamá: impacto sobre el precio spot en Panamá By Jairo Andrés Correa; John J. García

  1. By: Diego Alonso Agudelo Rueda; Milena Castaño
    Abstract: Foreign portfolio flows have been blamed for causing instability in emerging markets, especially during financial crises. This study measured the effect of foreign capital flows on volatility and exposure to world market risk in the six largest Latin American stock markets: Argentina, Brazil, Colombia, Chile, Mexico and Peru, for around 10 years including the 2008’s World financial crisis. This will test whether these flows cause instability for those markets and increase their exposure to international stock market returns. A proprietary database, from Emerging and time series models, both univariate (ARCH - GARCH) and multivariate (VAR), are used to estimate the effect foreign portfolio flows on the risk variables and the causality of these effects. We found no strong evidence to support the hypothesis that foreign flows cause instability in the Latin American stock markets, in spite of some evidence of causing price pressure. Instead, the evidence points to a strong dependence of market returns on international stock and foreign exchange markets, both in means and in volatility, instrumental to transmit crisis to those markets.
    Date: 2013–12–14
  2. By: Sean Higgins (Department of Economics, Tulane University); Nora Lustig (Department of Economics, Tulane University); Julio Ramirez (CADEP (Centro de Analisis y Difusion de la Economia Paraguaya)); Billy Swanson (Department of Economics, University of California Davis)
    Abstract: How much redistribution does Paraguay accomplish through social spending and taxes? How progressive are revenue collection and social spending? Using a standard fiscal incidence analysis, we quantify the reduction in inequality and poverty in Paraguay across income concepts, and contextualize these results by placing Paraguay in comparative perspective with other Latin American countries. Paraguay achieves a relatively small reduction in inequality, even when in-kind education and health benefits are taken into account. Direct taxes are progressive, indirect taxes are regressive, and total taxes are regressive. Social spending is progressive in relative terms, but less so than in any of the other countries analyzed.
    Keywords: inequality, poverty, Paraguay, social spending, taxes
    JEL: H22 D31 I32 I38
    Date: 2013–02
  3. By: Lina M. Cortés; Diego A. Agudelo; Samuel Mongrut
    Abstract: This paper contributes to the current literature of mergers and acquisitions (M&As) by studying the existence of waves and the determinants of M&A activity in the economies of Argentina, Brazil, Chile, Colombia, Mexico and Peru. From a sample of 2,490 M&As announcements reported by Thomson One for these countries, and applying the methodology proposed by Harford (2005), evidence of M&A waves is found for the periods 1993-2002 and 2003-2010 as reported for other regions in various international studies. After controlling for economic and business environment variables, as well as for profitability and book-to-market variables at industry level, we find evidence in favor of the neoclassical theory as a main explanation for M&As, but not for the misvaluation effect. For this purpose, a Prais-Winsten data model with panel corrected standard errors (PCSE) is used, and the results are confirmed through a negative binomial panel data estimation.
    Date: 2012–12–02
  4. By: Morrow, John; Carter, Michael
    Abstract: The political left turn in Latin America, which lagged its transition to liberalized market economies by a decade or more, challenges conventional economic explanations of voting behavior. This paper generalizes the forward-looking voter model to a broad range of dynamic, non-concave income processes. The model implies support for redistributive policies materializes rapidly if few prospects of upward mobility are present. In contrast, under imperfect information, a slow and polarizing shift toward redistributive preferences occurs. Simulation using fitted income dynamics suggests that imperfect information better accounts for the shift back to the left, and offers additional insights about political dynamics.
    Keywords: income dynamics, redistributive politics, polarization, Bayesian learning, Latin America
    JEL: D3 D7 D8 P1
    Date: 2013–02–23
  5. By: Andrés, Antonio R; Asongu , Simplice A
    Abstract: This paper employs a recent methodological innovation on intellectual property rights (IPRs) harmonization to project global timelines for common policies against software piracy. The findings on 99 countries are premised on 15 fundamental characteristics of software piracy based on income-levels (high-income, lower-middle-income, upper-middle-income and low-income), legal-origins (English common-law, French civil-law, German civil-law and, Scandinavian civil-law) and, regional proximity (South Asia, Europe & Central Asia, East Asia & the Pacific, Middle East & North Africa, Latin America & the Caribbean and, Sub-Saharan Africa). The results broadly show that a feasible horizon for the harmonization of blanket policies ranges from 4 to 10 years.
    Keywords: Software piracy; Intellectual property rights; Panel data; Convergence
    JEL: F42 K42 O34 O38 O57
    Date: 2013–01–05
  6. By: Jairo Andrés Correa; John J. García
    Abstract: El objetivo de este paper es analizar el impacto que tendría la integración energética prevista entre Colombia y Panamá sobre el precio spot en Panamá. Por medio de un modelo de Vectores de Corrección del Error (VEC) con datos mensuales entre 2000 y 2011 y un análisis impulso-respuesta del comportamiento del precio Spot ante choques de importaciones e incrementos de costos de combustibles de las centrales térmicas en Panamá y exportaciones desde Colombia y un pronóstico del precio Spot entre enero y julio de 2012; los principales resultados muestran que por medio de esta interconexión, Colombia tendría un impacto importante en la reducción del precio de energía Ocasional de Panamá. Esto es, por un aumento de un 1% en las exportaciones de energía de Colombia el precio spot en panamá se reduciría el 12%.
    Date: 2013–02–10

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