New Economics Papers
on Central and South America
Issue of 2013‒09‒28
eight papers chosen by

  1. Four Decades of Terms-of-Trade Booms: Saving-Investment Patterns and a New Metric of Income Windfall By Gustavo Adler; Nicolas E. Magud
  2. Brazil: Technical Note on Stress Testing the Banking Sector By International Monetary Fund. Western Hemisphere Dept.
  3. Sustaining trade reform : institutional lessons from Peru and Argentina By Baracat, Elias A.; Finger, J. Michael; Thorne, Raul Leon; Nogues, Julio J.
  4. Mechanisms of institutional continuity in neoliberal "success stories": Developmental regimes in Chile and Estonia By Madariaga, Aldo
  5. Assessing Reserve Adequacy: The Colombian Case By Javier Gómez Restrepo; Juan Sebastián Rojas Bohórquez
  6. The Heterogeneous Impact of Conditional Cash Transfers By Sebastian Galiani; Patrick J. McEwan
  7. Políticas de Inovação no Brasil e na China do Século XXI By Roberto Rocha C. Pires; Alexandre de Ávila Gomide; Lucas Alves Amaral
  8. Efficiency and equity implications of oil windfalls in Brazil By Jorgensen, Ole Hagen

  1. By: Gustavo Adler; Nicolas E. Magud
    Abstract: We study the history of terms-of-trade booms (during 1970–2012), with a focus on Latin America, through the prisms of a simple metric that quantifies the associated income windfall. We also document saving patterns during these episodes and propose a measure of how much of the income windfall was saved. We find that Latin America‘s terms-of-trade shocks of the last decade have not differed much in magnitude from those observed during the 1970s, but that the associated windfall have been substantially larger. While aggregate saving increased more than in past episodes, the share of the windfall saved (the marginal saving rate) seems to be lower, suggesting that greater aggregate saving reflects mainly the sheer size of the windfall rather than a greater 'effort' to save it. Finally, we find evidence that, while savings during the boom help to increase post-boom income, the composition of such savings matters. Specifically, in past episodes, savings allocated to foreign asset accumulation appear to have contributed more to post-boom income than those devoted to domestic investment.
    Keywords: Terms of trade;Latin America;External shocks;Savings;Investment;Income;Business cycles;Cross country analysis;Terms of trade, windfall, real income, aggregate saving, saving rate
    Date: 2013–05–09
  2. By: International Monetary Fund. Western Hemisphere Dept.
    Keywords: Banking sector;Credit expansion;Stress testing;Financial Sector Assessment Program;Brazil;
    Date: 2013–06–06
  3. By: Baracat, Elias A.; Finger, J. Michael; Thorne, Raul Leon; Nogues, Julio J.
    Abstract: This paper examines trade policies in Peru and Argentina since the reforms of the 1990s. Peru provides a valuable example of sustaining reform. Leaders have used negotiations and other international instruments to disseminate among Peruvians a positive vision of Peru in the international economy and to extend the application of World Trade Organization-based governance principles. Peru has introduced few new restrictions and all of them have been through World Trade Organization-sanctioned policy instruments. Argentina, by contrast, has introduced multiple restrictions, through procedures that eschew World Trade Organization governance principles. Moreover, leaders there have returned trade politics to the dependencia philosophy that sees the international economy as an exploitive environment. The paper brings out the weakness of international obligations to limit Argentina's return to import substitution and the pains at which Peru has gone to maintain the management of its economy within the same rules that Argentina has so easily violated.
    Keywords: Trade Law,Trade Policy,Economic Theory&Research,Free Trade,Emerging Markets
    Date: 2013–09–01
  4. By: Madariaga, Aldo
    Abstract: How do neoliberal political economies threatened with declining competitiveness and social cohesion manage to remain neoliberal over time? This paper explores mechanisms of neoliberal continuity in Chile and Estonia by extending gradualist approaches to institutional change with the notion of institutional hierarchy. Neoliberal continuity, it is argued, depends on the ability of dominant groups to defend those institutions that are more favorable to their interests while altering those that are not in order to obtain political support from other social groups. The question is explored in relation to the parallel trajectory of two policy domains: monetary policy (exchange rates) and industrial policy. Dominant groups try to retain a conservative monetary policy and a neutral industrial policy by altering their parameters (marginal adjustment), narrowing their interpretation (solidification), or negotiating minor/larger concessions (accommodation/compromise). While these mechanisms have allowed dominant groups in Chile and Estonia to retain neoliberalism, the timing and combination of different mechanisms over time have generated different trajectories of continuity. Estonia remains closer to a neoliberal orthodoxy whereas Chile has a more pragmatic trajectory. -- Auf welche Weise gelingt es neoliberalen Ländern, deren Wettbewerbsfähigkeit und sozialer Zusammenhalt bedroht sind, neoliberal zu bleiben? Das Papier untersucht Mechanismen neoliberaler Kontinuität in Chile und Estland, indem es ein Modell institutioneller Hierarchien mit gradualistischen Ansätzen des institutionellen Wandels verbindet. Die neoliberale Kontinuität eines Landes, so das Argument, hängt davon ab, wie erfolgreich einflussreiche gesellschaftliche Gruppen Institutionen unterstützen, die ihren Interessen zuträglich sind, und jene umgestalten, bei denen das nicht so ist, damit sie politische Unterstützung von anderen gesellschaftlichen Gruppen erhalten. Die Frage wird im Verhältnis zu parallel verlaufenden Trajektorien zweier politischer Domänen untersucht: Geldpolitik (Wechselkurse) und Industriepolitik. Vier Mechanismen werden beschrieben, die von einflussreichen Gruppen genutzt werden, um konservative Geld- und neutrale Industriepolitik aufrechtzuerhalten: marginale Korrektur (Änderung der Parameter); Verfestigung (konkrete Deutung); Kulanz/Kompromiss (Einigung auf mehr oder weniger große Zugeständnisse). Anhand dieser Mechanismen konnte der Neoliberalismus in Chile und Estland gewahrt werden. Durch die zeitliche Abfolge der Ereignisse und die Kombination verschiedener Mechanismen sind unterschiedliche Kontinuitätstrajektorien entstanden. So bleibt Estland näher an einer neoliberalen Rechtgläubigkeit, während Chile sich auf einem pragmatischen Entwicklungspfad befindet.
    Date: 2013
  5. By: Javier Gómez Restrepo; Juan Sebastián Rojas Bohórquez
    Abstract: International reserves are very important for emerging economies, as they allow to buffer possible liquidity vulnerabilities within a countries' balance of payments. Consequently, the issue of how many reserves should each country hold is a relevant issue for economic policy. The literature has identified two different methodological approaches to deal with this issue, namely reserve optimality and reserve adequacy indicators, which are carefully reviewed in this paper to determine which is the most appropriate to guide policy decisions in the Colombian case. The indicator proposed by the IMF (2011) was adopted to find the adequate level that this country should hold by calibrating it with historical data for Colombia. This new conservative index suggests that the accumulated levels of reserves have been adequate in recent years and that only in very extreme scenarios there is room to acquire additional reserves. Finally, it is worth highlighting that the methodology developed in this article provides a complementary indicator to the existing ones in order to evaluate the international reserves levels that Colombia should accumulate to reduce its vulnerability to external shocks.
    Keywords: International reserves, Reserve optimality, Reserve adequacy. Classification JEL: E58, F32
    Date: 2013–09
  6. By: Sebastian Galiani (University of Maryland); Patrick J. McEwan (Wellesley College)
    Abstract: The Honduran PRAF experiment randomly assigned conditional cash transfers to 40 of 70 poor municipalities, within five strata defined by a poverty proxy. Using census data, we show that eligible children were 8 percentage points more likely to enroll in school and 3 percentage points less likely to work. The effects were much larger in the two poorest strata, and statistically insignificant in the other three (the latter finding is robust to the use of a separate regression-discontinuity design). Heterogeneity confirms the importance of judicious targeting to maximize the impact and cost-effectiveness of CCTs. There is no consistent evidence of effects on ineligible children or on adult labor supply.
    JEL: H00
    Date: 2013–09
  7. By: Roberto Rocha C. Pires; Alexandre de Ávila Gomide; Lucas Alves Amaral
    Abstract: Este artigo analisa a política de revitalização da indústria naval no Brasil desde meados dos anos 2000, sob a perspectiva de seu arranjo político-institucional. Para avaliar as capacidades políticas e técnico-administrativas do arranjo foi elaborada uma comparação entre o atual arranjo, vivido dentro de um contexto democrático pós-1988, e o arranjo político-institucional da indústria naval entre as décadas de 1960 e 1980, período marcado por um desenvolvimentismo burocrático-autoritário. Em 1980, ocorreu forte crise no setor, seguida de um declínio significativo na década de 1990, provocando a quase inexistência desta indústria no país, retomada nos anos 2000 com o apoio de iniciativas, tais como o Programa de Modernização da Indústria Nacional de Petróleo e Gás (PROMINP), o Programa de Modernização e Expansão da Frota (PROMEF) da Petrobras Transporte S. A. (Transpetro) e o Programa de Aceleração do Crescimento (PAC),frutos do ativismo estatal com vistas ao desenvolvimento do país. O estudo buscou mapear os principais atores e processos da atual política da indústria naval brasileira, descrevê-los na medida de sua importância para o arranjo político-institucional que sustenta a sua implementação, bem como observar sua estruturação formal e seu funcionamento prático. O objetivo deste trabalho é entender como e em que medida o arranjo atual contribui (ou obstaculiza) a execução da política voltada para a revitalização da indústria naval no país. The article examines governmental policies for the revitalization of the shipbuilding industry in Brazil since the mid-2000s. It analyzes such policies from the perspective of their political-institutional arrangements. In order to evaluate both the political capacities and technical-administrative capacities produced by such arrangements, we compare the contemporary policy efforts, implemented under a democratic environment (post-1988), with those that supported the emergence of the shipbuilding industry in the past (between the 1960s and 1980s), a period characterized by authoritarian rule. After a strong crisis in the sector during the 1980s, the domestic industry was nearly extinguished in the 1990s. However, in the 2000s, the industry reemerges due to a series of government-led initiatives, such as the Program for the Modernization of the Oil and Gas Industry (PROMINP), the Program for the Modernization and Expansion of Naval Fleet (PROMEF), and the Program for the Acceleration of Growth (PAC). The analysis mapped out the main actors and processes involved with current efforts to promote the national naval industry. We describe the implementation processes, both from the perspective of the formal rules and institutions and of their actual operation. Our goal was to understand to which extend the implementation arrangements, and their interfaces with democratic institutions, contribute (or impose obstacles) to the execution of governmental policies targeting the revitalization of the Brazilian shipbuilding industry.
    Date: 2013–08
  8. By: Jorgensen, Ole Hagen
    Abstract: Large oil reserves off the coast of Brazil may substantially increase the country’s oil revenue in the future. A natural resource"curse"could be the consequence if an appropriate share of the oil revenue is not invested. This issue is addressed in this paper for Brazil both theoretically and empirically by focusing on (i) the efficient allocation of oil revenue between investment and consumption; and (ii) because it may be efficient to consume a certain share of the oil revenue, the distributional implications across generations of higher public consumption. The main finding is that, if the Pre-Salt oil revenue brings the aggregate oil revenue in Brazil above 10 percent of gross domestic product, there will be scope for consuming a certain share of it while still maintaining efficiency. But unless oil revenue reaches 10 percent or more of gross domestic product, then all of it should be invested in order for the economy to approach the efficient investment level. If oil revenue as a share of gross domestic product was 10 percent, then the achievable growth in gross domestic product could reach 9.0 percent. The distributional implications are positive for all generations, but vary across generations depending on how much of the oil revenue is invested. As a result, transfer policies could be adjusted to ensure equality in its distribution.
    Keywords: Economic Theory&Research,Debt Markets,Emerging Markets,Currencies and Exchange Rates,Investment and Investment Climate
    Date: 2013–09–01

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