New Economics Papers
on Central and South America
Issue of 2013‒08‒10
ten papers chosen by

  1. How Redistributive is Fiscal Policy in Latin America?: The Case of Chile and Mexico By Barbara Castelletti
  2. Acceso a servicios financieros en Colombia. By Carlos Gustavo Cano; Maria del Pilar Esguerra Umaña; Nidia García; J. Leonardo Rueda; Andrés Mauricio Velasco Martínez
  3. A Comparative Note About Estimation of the Fractional Parameter under Additive Outliers By Gabriel Rodriguez
  4. Do infrastructure reforms reduce the effect of corruption ? theory and evidence from Latin America and the Caribbean By Wren-Lewis, Liam
  5. Tailoring social protection to small island developing states : lessons learned from the Caribbean By Williams, Asha; Cheston, Timothy; Coudouel, Aline; Subran, Ludovic
  6. A Note on the Size of the ADF Test with Additive Outliers and Fractional Errors. A Reapraisal about the (Non) Stationarity of the Latin-American Inflation Series. By Gabriel Rodriguez; Dionisio Ramirez
  7. A New Interpretation of Kaldor's First Growth Law for Open Developing Countries By Penelope Pacheco-Lopez; A.P.Thirlwall
  8. Effects of Colombia's social protection system on workers'choice between formal and informal employment By Camacho, Adriana; Conover, Emily; Hoyos, Alejandro
  9. Social Efficiency in Peruvian Microfinance Institutions: a semi-parametric approach By Giovanna Aguilar; Jhonatan Claussen
  10. Colombian bank efficiency and the role of market structure By Diana Fernández Moreno; Dairo Estrada

  1. By: Barbara Castelletti
    Abstract: This paper looks at the incidence of fiscal policy on the income distribution for Chile and Mexico. Notably by broadening the income concept to account for in-kind benefits and taxes, this paper provides a full picture of the effect of fiscal policy on reducing income inequality. The contrast between the estimates for Chile and Mexico and the rest of OECD countries provides an overall snapshot of income distribution of high inequality countries vis-à-vis advanced economies. The breakdown of the Gini coefficient at a detailed level of policy instruments also enables us to identify the main channels of income inequality reduction and shows how these results differ across countries. Our results for Chile and Mexico suggest that fiscal policy significantly benefits the poorest income groups, mainly through in-kind services such as education and health care. Nevertheless, when compared with outcomes in high-income countries, the effectiveness of fiscal policy in reducing inequality is still limited. Cash transfers (especially those for old-age programmes), direct taxation and, to some extent, a higher market inequality are the main factors behind this difference.<BR>Cet article étudie l’impact des politiques fiscales sur la répartition des revenus au Chili et au Mexique. En outre, en intégrant dans la définition des prestations les transferts en nature et les taxes, cet article dresse un portrait complet de l’effet des politiques fiscales dans la réduction des inégalités salariales. Les différences dans les estimations du Chili et du Mexique avec le reste des pays de l’OCDE permettent un aperçu général de la répartition des revenus dans les pays les plus inégalitaires par rapport aux économies avancées. L’analyse du coefficient de Gini à un niveau détaillé des instruments politiques nous permet également d’identifier les principaux canaux de réduction des inégalités et de comprendre l’origine des divergences entre pays. Nos résultats pour le Chili et le Mexique suggèrent que la politique fiscale bénéficie significativement aux pays à faible revenu, principalement à travers des services en nature tels que l’éducation et les services de santé. Toutefois, en comparaison avec les résultats des pays à haut revenu, l’efficacité de la politique fiscale sur la réduction des inégalités reste limitée. Les transferts en espèces (particulièrement ceux liés au système des retraites), l’imposition directe et, dans une certaine mesure, de fortes inégalités de marché sont les principaux facteurs de cette différence.
    Keywords: fiscal policy, Latin America, income distribution, tax-benefit analysis, politique fiscale, Amérique latine, répartition des revenus, analyse socio-fiscal
    JEL: D31 H20 H31 H40 I30 I32 I38
    Date: 2013–07–24
  2. By: Carlos Gustavo Cano; Maria del Pilar Esguerra Umaña; Nidia García; J. Leonardo Rueda; Andrés Mauricio Velasco Martínez
    Abstract: El acceso a los servicios financieros constituye un derecho fundamental contemporáneo y un instrumento insustituible en la asignación de los recursos que permitan la acumulación de capital. Así las cosas, desde el ángulo del crecimiento y la igualdad, el alcance social de dicha herramienta resulta crucial para el desarrollo económico en términos de equidad y sostenibilidad. Por tal motivo, la exclusión financiera equivale a una forma de exclusión social. Lo cual justifica que con la más alta prioridad el Estado garantice a través del marco regulatorio el acceso a los servicios financieros de los segmentos más vulnerables de la población. En este trabajo, se discute la importancia de la definición de inclusión financiera en contraposición al concepto tradicional de bancarización; y se analizan las variables que determinan la inclusión financiera desde el punto de vista de la demanda, a través de la agregación de los servicios financieros.
    Keywords: Inclusión financiera, Capacidades financieras, Regulación en Colombia. Classification JEL:D14, D,18, G28
    Date: 2013–07
  3. By: Gabriel Rodriguez (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: In a recent paper, Fajardo et al. (2009) propose an alternative semiparametric estimator of the fractional parameter in ARFIMA models which is robust to the presence of additive outliers. The results are very interesting, however, they use samples of 300 or 800 observations which are rarely found in macroeconomics or economics. In order to perform a comparison, I use the procedure to detect for additive outliers based on the estimator Tau- d suggested by Perron and Rodríguez (2003). Further, I use dummy variables associated to the location of the selected outliers to estimate the fractional parameter. I found better results for the mean and bias of this parameter when T = 100 and the results in terms of the standard deviation and the MSE are very similar. However, for higher sample sizes as 300 or 800, the robust procedure performs better, specially based on the standard deviation and MSE measures. Empirical applications for seven Latin American ination series with very small sample sizes contaminated by additive outliers is discussed. What we …nd is that when no correction for additive outliers is performed, the fractional parameter is underestimated.
    Keywords: Additive Outliers, ARFIMA Errors, semiparametric estimation.
    JEL: C2 C3 C5
    Date: 2013
  4. By: Wren-Lewis, Liam
    Abstract: This paper investigates the interaction between corruption and governance at the sector level. A simple model illustrates how both an increase in regulatory autonomy and privatization may influence the effect of corruption. The interaction is analyzed empirically using a fixed-effects estimator on a panel of 153 electricity distribution firms across 18 countries in Latin America and the Caribbean from 1995--2007. Greater corruption is associated with lower firm labor productivity, but this association is reduced when an independent regulatory agency is present. These results survive a range of robustness checks, including instrumenting for regulatory governance, controlling for a large range of observables, and using several different corruption measures. The association between corruption and productivity also appears weaker for privately owned firms compared to publicly owned firms, though this result is somewhat less robust.
    Keywords: Public Sector Corruption&Anticorruption Measures,National Governance,Governance Indicators,Banks&Banking Reform,Economic Theory&Research
    Date: 2013–08–01
  5. By: Williams, Asha; Cheston, Timothy; Coudouel, Aline; Subran, Ludovic
    Abstract: This paper examines the role of social protection (SP) in Small Island Developing States (SIDS), given their particular structural, human resource and capacity constraints. While it focuses on SIDS in Latin America and the Caribbean, thelessons may be relevant to other SIDS with similar challenges. Caribbean SIDS have made significant commitment to address the needs of the vulnerable, as reflected by their level of SP spending, and the numerous safety net programs, labor market interventions, and insurance schemes. Nevertheless gaps remain, as many vulnerable groups are underserved and the systems show limited responsiveness to shocks. This is further hampered by duplication of efforts which limits the efficiency of interventions. The paper recommends a series of systemic efforts to: 1) harmonize SP systems and policies across the region to better respond to increased regional mobility; 2) consolidate SP programs within countries to improve efficiency; 3) foster key human capital improvements among the poor to break inter-generational transmission of poverty; 4) improve monitoring and evaluation systems and data collection capacity to facilitate more responsive SP programs; and 5) increase partnerships with civil society and private sector. At the thematic level, the paper recommends: a) improving the responsiveness to economic and environmental shocks; b) improving efficiency and effectiveness of social safety net programs, in particular cash transfer programs; c) tailoring labor market interventions to respond to constraints faced in the SIDS context; and d) reforming social insurance schemes, particularly pension schemes, to address current deficiencies and ensure readiness to respond to impending ageing.
    Keywords: Safety Nets and Transfers,Population Policies,Labor Policies,Labor Markets,Debt Markets
    Date: 2013–08–01
  6. By: Gabriel Rodriguez (Departamento de Economía - Pontificia Universidad Católica del Perú); Dionisio Ramirez (Universidad Castilla La Mancha)
    Abstract: This note analyzes the empirical size of the augmented Dickey and Fuller (ADF) statistic proposed by Perron and Rodríguez (2003) when the errors are frac- tional. This ADF is based on a searching procedure for additive outliers based on …rst-differences of the data named Tau- d. Simulations show that empirical size of the ADF is not affected by fractional errors con…rming the claim of Perron and Rodríguez (2003) that the procedure Tau-d is robust to departures of the unit root framework. In particular the results show low sensitivity of the size of the ADF statistic respect to the fractional parameter (d). However, as expected, when there is strong negative moving average autocorrelation or negative au- toregressive autocorrelation, the ADF statistic is oversized. These difficulties are …xed when sample increases (from T = 100 to T = 200). Empirical applica- tion to eight quarterly Latin-American ination series is also provided showing the importance of taking into account dummy variables for the detected additive outliers.
    Keywords: Additive Outliers, ARFIMA Errors, ADF test
    JEL: C2 C3 C5
    Date: 2013
  7. By: Penelope Pacheco-Lopez; A.P.Thirlwall
    Abstract: Kaldor’s first law of growth posits a positive causal relation between the growth of manufacturing output and the growth of GDP due to static and dynamic returns to scale in manufacturing and rising productivity outside the manufacturing sector as resources are transferred from diminishing returns activities. In an open economy, however, the Kaldor first law of growth is open to another interpretation because it is apparent across countries that there is a close association between manufacturing output growth and export growth, and between export growth and GDP growth. Results are presented for 89 developing countries over the period 1990-2011, also distinguishing between low income, lower-middle income and upper-middle income countries, and between the continents of Africa, Asia and Latin America.
    Keywords: Kaldor’s growth laws; manufacturing growth; export growth; GDP growth
    JEL: C21 E12 F43
    Date: 2013–08
  8. By: Camacho, Adriana; Conover, Emily; Hoyos, Alejandro
    Abstract: This paper examines whether the Colombian government's expansion of social programs in the early 1990s, particularly the publicly provided health insurance, discouraged formal employment. Using household survey data and variation across municipalities in the onset of interviews for the SISBEN, the instrument used to identify beneficiaries for public health insurance, it shows robust and consistent estimates of an increase in informal employment of approximately 4 percentage points. Similar results are obtained using an alternative dataset, consisting of a panel of individuals interviewed for the first and second SISBEN. The findings suggest that marginal individuals optimized when deciding whether to participate in the formal sector.
    Keywords: Health Monitoring&Evaluation,Labor Markets,Health Systems Development&Reform,Labor Policies,Population Policies
    Date: 2013–08–01
  9. By: Giovanna Aguilar (Departamento de Economía - Pontificia Universidad Católica del Perú); Jhonatan Claussen (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: This study aims to assess the social efficiency of microfinance institutions (MFIs) —regulated and non-regulated— in Peru. Social efficiency is referred to the capacity of MFIs to produce more social outputs —number of poor clients and women served— without using more resources. The Data Envelopment Analysis methodology is used to carry on efficiency analysis. Additionally, we analyze the potential determinants of social efficiency of MFIs through a Tobit regression analysis in the context of panel data, in order to investigate whether differences related to the institutional nature of MFIs explain differences in social efficiency achieved by them. The study period covers the years from 2007 to 2011. The results show that non-regulated MFIs are socially more efficient. On the contrary, those MFIs which are within regulatory scheme, shown in most cases, distant positions to the efficient frontier. Regression analysis shows that being a regulated MFI negatively affects social efficiency levels, a greater presence in rural area positively affect social efficiency levels. Although there is evidence that financial returns could relate positively to social efficiency, this result does not seem to be as robust. At the other extreme, the lending technology does not seem to be relevant to explain social efficiency.
    Keywords: Microfinance, Social Efficiency, Efficiency frontiers, DEA analysis
    JEL: G21 O10 O16
    Date: 2013
  10. By: Diana Fernández Moreno; Dairo Estrada
    Abstract: Colombia’s financial system has undertaken major changes during the last decade, with new regulatory regimes being implemented, as well as a significant expansion of financial services. Nevertheless, the recent literature has yet to analyze this new epoch for banking institutions under an efficiency framework. Taking into account the availability of new information and the methodological advances of recent years, our purpose is to study the evolution of bank efficiency during the past few years, as well as to evaluate the influence of some market structure variables on the latter. We find evidence, both under SFA and Order-m, supporting an increase in efficiency over time. Moreover, relating the latter with market structure variables suggests that there is a positive relationship between market power and efficiency; this occurs due to product differentiation, which allows banks to gain in efficiency provided they don’t set excessive credit prices. Nonetheless, there is an open debate concerning the behavior of banks with the highest market shares, since the negative relation between market concentration and efficiency advocates for a "quiet life form", where banks don’t have incentives to fully minimize costs. Additional to these results, we provide evidence of potential impacts that mergers and credit specialization may have on efficiency.
    Keywords: Bank Efficiency, Concentration, Market Power, Stochastic Frontier Analysis, Order-m. Classification JEL: C14, D40, D61, G21

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