nep-lam New Economics Papers
on Central and South America
Issue of 2015‒01‒14
eight papers chosen by

  1. Inequality stagnation in Latin America in the aftermath of the global financial crisis By Cord, Louise; Barriga Cabanillas, Oscar; Lucchetti, Leonardo; Rodriguez-Castelan, Carlos; Sousa, Liliana D.; Valderrama, Daniel
  2. An Application of a Short Memory Model With Random Level Shifts to the Volatility of Latin American Stock Market Returns By Gabriel Rodriguez; Roxana Tramontana
  3. Public Transfers and Poverty Reduction: an Evaluation of Program Contribution to the Exit Rate from Poverty of Children and the Elderly By Marisa Bucheli
  4. Using the Infrastructure of a Conditional Cash Transfer Program to Deliver a Scalable Integrated Early Child Development Program in Colombia: Cluster Randomized Controlled Trial By Orazio P. Attanasio; Camila Fernández; Emla O. A. Fitzsimons; Sally M. Grantham-McGregor; Costas Meghir; Marta Rubio-Codina
  5. Notas sobre Política de Desarrollo Productivo en Colombia By Marcela Eslava; Marcela Meléndez; Guillermo Perry
  6. Export shocks and the volatility of returns to schooling : evidence from twelve Latin American economies By Lederman, Daniel; Rojas, Diego
  7. Commodity price shocks and inflation within an optimal monetary policy framework: the case of Colombia By Luis Eduardo Arango; Ximena Chavarro; Eliana González
  8. Macroeconomic and Financial Consequences of the After Crisis Government-Driven Credit Expansion in Brazil By Marco Bonomo; Ricardo Brito; Bruno Martins

  1. By: Cord, Louise; Barriga Cabanillas, Oscar; Lucchetti, Leonardo; Rodriguez-Castelan, Carlos; Sousa, Liliana D.; Valderrama, Daniel
    Abstract: Over the past decade (2003-12), Latin America has experienced strong income growth and a notable reduction in income inequality, with the region's Gini coefficient falling from 55.6 to 51.8. Previous studies have warned about the sustainability of such a decline, and this paper presents evidence of stagnation in the pace of reduction of income inequality in Latin America since 2010. This phenomenon of stagnation is robust to different measures of inequality and is largely attributable to the impact of the Global Financial Crisis on Mexico and Central America, where inequality rose after 2010 as labor income recovered. Moreover, this paper finds evidence that much of the continuation of inequality reduction after the crisis at the country level has been due to negative or zero income growth for households in the top of the income distribution, and lower growth of the incomes of the poorest households. The crisis also highlighted weaknesses in the region's labor markets and the heavy reliance on public transfers to redistribute, underscoring the vulnerability of the region's recent social gains to global economic conditions.
    Keywords: Inequality,Poverty Impact Evaluation,Services&Transfers to Poor,Income,Regional Economic Development
    Date: 2014–12–01
  2. By: Gabriel Rodriguez (Departamento de Economía - Pontificia Universidad Católica del Perú); Roxana Tramontana (Departamento de Economía - Pontificia Universidad Católica del Perú)
    Abstract: Empirical research indicates that the volatility of stock return time series have long memory. However, it has been demonstrated that short memory processes contaminated with random level shifts can often be confused as being long memory. Often this feature is referred to as spurious long memory. This paper represents an empirical study of the random level shift (RLS) model using the approach of Lu and Perron (2010) and Li and Perron (2013) for the volatility of daily stocks returns data for Öve Latin American countries. The RLS model consists of the sum of a short term memory component and a level shift component, where the level shift component is governed by a Bernoulli process with a shift probability . The estimation results suggest that the level shifts in the volatility of daily stocks returns data are infrequent but once they are taken into account, the long memory characteristic and the GARCH e§ects disappear. An out-of-sample forecasting exercise is also provided. JEL Classification-JEL: C22
    Keywords: Returns, Volatility, Long Memory, Random Level Shifts, Kalman Filter, Forecasting, Latin America
    Date: 2014
  3. By: Marisa Bucheli (Departamento de Economía, Facultad de Ciencias Sociales, Universidad de la República)
    Abstract: In Uruguay, social spending reduces poverty. The aim of this paper is to compare its performance for children and the elderly. The main motivation is that in Uruguay, as in the rest of Latin America, poverty affects mostly children, even after the recent period of fall in poverty. The methodological strategy consists on the estimation of the effect of transfers on the poverty exit rate and its decomposition in the coverage effect and the amount effect. The main conclusions are as follows: a) households with children (elder) are the less (more) likely to leave poverty, b) the reason is the per capita amount of the transfer received by each household type and not the coverage, c) the effectiveness of the amount is lower for households with children than with elders because poverty is more intense for the former, d) households in the same poverty conditions are less likely to be lifted out of poverty when they are composed by children than by elders because the conditional transfers directed to children are lower than the assistance pensions for the elders.
    Keywords: poverty, public transfers, social spending, children
    JEL: I32 I38 J13
    Date: 2014–09
  4. By: Orazio P. Attanasio; Camila Fernández; Emla O. A. Fitzsimons; Sally M. Grantham-McGregor; Costas Meghir; Marta Rubio-Codina
    Abstract: Using the infrastructure of a national welfare program we implemented the integrated early child development intervention on a large scale and showed its potential for improving children’s cognitive development. We found no effect of supplementation on developmental or health outcomes. Moreover, supplementation did not interact with stimulation. The implementation model for delivering stimulation suggests that it may serve as a promising blueprint for future policy on early childhood development.
    Keywords: Cash Transfer Program, Early Child Development, Colombia, Randomized Controlled Trial, International, Early Childhood
    JEL: I F Z
    Date: 2014–09–29
  5. By: Marcela Eslava; Marcela Meléndez; Guillermo Perry
    Abstract: Este documento contiene una serie de reflexiones sobre políticas de desarrollo del sector productivo en Colombia, que surgen de investigaciones de los autores, algunas de ellas en compañía de otros coautores. El documento, estructurado a manera de “postre de notas”, plantea reflexiones puntuales sobre diferentes temas relacionados con la política de desarrollo productivo en Colombia, centrales al debate actual.
    Keywords: Política Industrial, Políticas de Desarrollo Productivo, Colombia
    JEL: L52 L66 L67 L86
    Date: 2014–11–07
  6. By: Lederman, Daniel; Rojas, Diego
    Abstract: This paper builds on previous studies to uncover evidence suggesting that cyclical fluctuations in returns to schooling are determined by fluctuations in foreign demand, which tend to be positively correlated with returns to schooling. The effect of export fluctuations (driven by changes in foreign demand) seems to be attenuated by labor market rigidities, such as constraints on employers to hire temporary workers on an hourly basis. This evidence suggests that countries that have flexible labor markets and experience volatility in their external demand might also experience volatility in returns to schooling. The paper discusses why this might be a concern for developing countries.
    Keywords: Labor Markets,Economic Theory&Research,Labor Policies,Emerging Markets,Debt Markets
    Date: 2014–12–01
  7. By: Luis Eduardo Arango; Ximena Chavarro; Eliana González
    Abstract: A small open macroeconomic model, in which an optimal interest rate rule emerges to drive the inflation behavior, is used to model inflation within an inflation targeting framework. This set up is used to estimate the relationship between commodity prices shocks and the inflation process in a country that both export and import commodities. We found evidence of a positive, yet small, impact from food international price shocks to inflation. However, these effects are no longer observable once the sample is split in the periods before and after the boom. The lack of effect from oil and energy price shocks we obtain supports the recent findings in the literature of a substantial decrease in the pass-through from oil prices to headline inflation. Thus, our interpretation is that monetary authority has faced rightly the shocks to commodity prices. Inflation expectations are the main determinant of inflation during the inflation targeting regime. Commodity prices movements are to a great extent included in the information set to form expectations.
    Keywords: Commodity prices, inflation-targeting regime, optimal monetary policy, expectations.
    JEL: E43 E58
    Date: 2014–12–22
  8. By: Marco Bonomo; Ricardo Brito; Bruno Martins
    Abstract: Government-driven credit had an important role in countervailing private credit crunch in Brazil during the recent financial crisis. However, government credit concessions continued to expand after the economy recovered. This paper investigates some important features of this expansion using a huge repository of loan contracts between banks and firms, composing an unbalanced panel of almost 1 million firms between 2004 and 2012. We show that earmarked funds have been particularly important for sectors intensive in positive social externalities. However, those sectors were not the main beneficiaries of the strong expansion in earmarked credit observed since the crisis. Our results also show that larger, older and less risky firms have benefited most from the government sponsored credit expansion. Additionally, although a higher access to earmarked credit tends to lead to higher leverage, the effect on investment appears to be insignificant for publicly traded firms. Since interest rates on earmarked loans are lower than the market interest rates, firms with higher access to this type of loan tend to lower cost of debt
    Date: 2014–12

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