New Economics Papers
on Central and South America
Issue of 2013‒09‒26
eight papers chosen by

  1. Brazil's bank spread in international context : from macro to micro drivers By Jorgensen, Ole Hagen; Apostolou, Apostolos
  2. For a quality leap in business relations between China and Latin America and the Caribbean By Osvaldo Rosales
  3. Shelter from the Storm: Upgrading Housing Infrastructure in Latin American Slums By Sebastian Galiani; Paul Gertler; Ryan Cooper; Sebastian Martinez; Adam Ross; Raimundo Undurraga
  4. Growth Slowdowns and the Middle-Income Trap By Shekhar Aiyar; Romain A Duval; Damien Puy; Yiqun Wu; Longmei Zhang
  5. Sobre la descomposición sectorial de crecimiento y la pobreza: evidencia empírica para Colombia, 1997-2010 By Jorge Barrientos Marín; Sebastian Ramirez; Elkin Tabares
  6. The ex-ante effects of non-contributory pensions in Colombia and Peru By Javier Olivera; Blanca Zuluaga
  7. Macroeconomic factors influencing interest rates of microfinance institutions in Latin America By Janda, Karel; Zetek, Pavel
  8. Brazil: Technical Note on Macroprudential Policy Framework By International Monetary Fund. Western Hemisphere Dept.

  1. By: Jorgensen, Ole Hagen; Apostolou, Apostolos
    Abstract: In an international context, this paper analyzes the main drivers of Brazil's bank spreads measured by the net interest margin, by estimating internationally comparable measures for (i) institutional and regulatory (micro-) factors; (ii) macro-economic factors; and (iii) banking competition factors. The paper produces and applies a novel data set covering 197 areas and countries; ranging from 1995 to 2009, including 106 banks for Brazil and 16,434 banks worldwide. The analysis finds that micro-factors are the main drivers of spreads across the world. In the case of Brazil, the spread is found to be strongly accounted for by micro-factors -- also in international comparison. For example, micro-factors contributed 7.2 percentage points (79 percent) of the 11.5 percent total spread in Brazil in 2009, while macro-factors and banking competition factors jointly accounted for only 1.9 percentage points (21 percent). Conversely, Brazil does not rank high in international comparison in terms of macro-economic risk: Brazil and other countries from Latin America and the Caribbean are found to feature the highest micro-factors in the world while having the second-highest spreads and the second-lowest contribution of macro-factors. These unique findings suggest that countries striving toward reducing bank spreads should consider policies aimed at reducing microeconomic frictions in their banking sectors, in particular, (i) the economic costs of holding reserves, (ii) credit risk, and (iii) implicit interest payments. In terms of policy dialogue, this would be especially relevant for Brazil and for Latin American and Caribbean countries in general.
    Keywords: Banks&Banking Reform,Debt Markets,Access to Finance,Financial Intermediation,Emerging Markets
    Date: 2013–09–01
  2. By: Osvaldo Rosales
    Abstract: This paper examines the economic and trade relations between China and Latin America and the Caribbean (LAC). It analizes the current role of China in the world economy and the outlook for growth in the Chinese economy and its impact on global trade. Based on this, the article presents the main data of the growing presence of China in the international trade map of LAC and the evolution of Chinese FDI in the region. The article concludes with a set of recommendations aimed at improving the quality of economic and commercial links between China and LAC. Particular emphasis is given to the LAC's exports diversification oriented to China and Chinese investment's attraction oriented to manufactures, services and infrastructure.
    Keywords: Exports, China, Latin America, regional data, trade relations
    Date: 2013–07
  3. By: Sebastian Galiani; Paul Gertler; Ryan Cooper; Sebastian Martinez; Adam Ross; Raimundo Undurraga
    Abstract: This paper provides rigorous empirical evidence on the causal effects that upgrading slum dwellings has on the living conditions of the extremely poor. In particular, we study the impact of providing better houses in situ to slum dwellers in El Salvador, Mexico and Uruguay. We experimentally evaluate the impact of a housing project run by the NGO TECHO, a youth-led program which provides basic pre-fabricated houses to members of extremely poor population groups in Latin America. The main objective of the program is to improve household well-being. Our findings show that better houses have a positive effect on overall housing conditions and general well-being: the members of treated households are happier with their quality of life. In two countries, we also document significant improvements in children’s health; in El Salvador, slum dwellers also feel that they are safer than before. There are no statistically significant effects on the possession of durable goods or in terms of labor outcomes. Our results are unusually robust in terms of both internal and external validity because they are derived from experiments in three different Latin American countries.
    JEL: C93 D63 O0
    Date: 2013–08
  4. By: Shekhar Aiyar; Romain A Duval; Damien Puy; Yiqun Wu; Longmei Zhang
    Abstract: The “middle-income trap†is the phenomenon of hitherto rapidly growing economies stagnating at middle-income levels and failing to graduate into the ranks of high-income countries. In this study we examine the middle-income trap as a special case of growth slowdowns, which are identified as large sudden and sustained deviations from the growth path predicted by a basic conditional convergence framework. We then examine their determinants by means of probit regressions, looking into the role of institutions, demography, infrastructure, the macroeconomic environment, output structure and trade structure. Two variants of Bayesian Model Averaging are used as robustness checks. The results—including some that indeed speak to the special status of middle-income countries—are then used to derive policy implications, with a particular focus on Asian economies.
    Keywords: Economic growth;East Asia;Latin America;Developing countries;Cross country analysis;Economic models;growth, slowdown, middle income trap, Bayesian Model Averaging
    Date: 2013–03–20
  5. By: Jorge Barrientos Marín; Sebastian Ramirez; Elkin Tabares (Universidad de Antioquia)
    Abstract: : La hipótesis del patrón de crecimiento-HPC afirma que las diferencias en el crecimiento económico, así como las diferencias regionales, afectan la tasa de reducción de la pobreza, independientemente de la tasa global del crecimiento del PIB. En este trabajo estamos interesados en estudiar la validez de la hipótesis para Colombia durante el período 1997-2010. Para lograr el objetivo, seguimos la metodología sugerida por Ferreira et. al (2007) empleada para el caso brasileño. Metodológicamente, procedemos de la siguiente manera: construimos un panel de datos que relaciona la pobreza con diferentes sectores de la economía colombiana. Los resultados sugieren la existencia de grandes heterogeneidades espaciales y sectoriales a la hora de explicar alguna variación de la pobreza.
    Keywords: crecimiento, pobreza
    Date: 2013
  6. By: Javier Olivera (UCD Geary Institute, PEARL Institute for Research on Social Inequality, University of Luxembourg); Blanca Zuluaga (Department of Economics, Icesi University)
    Abstract: The aim of this paper is to study the ex-ante effects of the implementation of a Non Contributory Pension (NCP) program in Colombia and Peru. Relying on household survey data, we simulate the potential impact of the transfer on poverty, inequality, fiscal cost, and the probability of affiliation to the contributory pension system. This last effect is the most direct behavioural effect one can expect from the implementation of a NCP scheme. For the behavioural response we estimate a Nested Logit Model. Our results show that a NCP in Colombia and Peru contributes to the reduction of poverty and inequality among the elderly, particularly in rural areas at affordable fiscal costs. Furthermore, there is not a large impact on the probability of affiliation to contributory pensions when the program is targeted to the poor (and extreme poor), with the exception of Peruvian women.
    Keywords: non-contributory pensions, social security, old-age, poverty
    JEL: D30 I32 I38 J14 J26
    Date: 2013–09–10
  7. By: Janda, Karel; Zetek, Pavel
    Abstract: Agricultural output in developing countries still represents a substantial part of GDP. This ratio has actually increased in some areas such as Latin America. As such, there is an increasing importance of microfinance institutions (MFIs) focusing on activities associated with agriculture and encouraging entrepreneurship in agriculture and in the rural communities in general. The contribution of microfinance institutions consists mainly in providing special-purpose loans, usually without collateral. However, questions exist as to the magnitude and adequate level of risk of providing micro-credit loans in relation to the interest rates being charged. We review two main approaches to setting interest rates in MFIs. One approach takes the view that interest rates should be set at a high level due to the excessive risk that these institutions undertake. The second approach is to convince the public of the possibility of reducing these rates through cost savings, increased efficiency, and sharing best practice, etc. Subsequently we econometrically analyse the impact of macroeconomic factors on microfinance interest rates in Latin America and the Caribbean. We show that these results depend on the chosen indicator of interest rate.
    Keywords: microfinance, interest rate, macroeconomic factors, agriculture
    JEL: E43 G21 O13
    Date: 2013–09–19
  8. By: International Monetary Fund. Western Hemisphere Dept.
    Keywords: Macroprudential Policy;Banks;Capital flows;Financial stability;Financial Sector Assessment Program;Brazil;
    Date: 2013–06–06

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