nep-lam New Economics Papers
on Central and South America
Issue of 2015‒02‒11
ten papers chosen by

  1. The Latin American efficiency gap By Francesco Caselli
  2. The Formation of New Firms: An ordered probit model approach for Latin American and Caribbean Countries By Jorge Andrés Vélez Ospina; Jacobo Campo Robledo
  3. The China Boom in Latin America: An End to Austerity? By Stephen B. Kaplan
  4. Tracking the Exchange Rate Management in Latin America By César Carrera
  5. Health Status and Labor Force Participation: Evidence for Urban Low and Middle Income Individuals in Colombia By Ana María Iregui-Bohórquez; Ligia Alba Melo-Becerra; María Teresa Ramírez-Giraldo
  6. Spatial Interactions in Tropical Deforestation: An application to the Brazilian Amazon By Eric Nazindigouba KERE; Philippe DELACOTE; Saraly ANDRADE DE SA
  7. Consumer credit performance over the business cycle in Colombia: some empirical facts By Luis E. Arango; Lina Cardona-Sosa
  8. Environmental and economic impacts of growing certified organic coffee in Colombia By Ibanez, Marcela; Blackmann, Allen
  9. A Review of the OECD Income Distribution Database By Leonardo Gasparini; Leopoldo Tornarolli
  10. El Impacto de la Ley Federal de Educación Argentina sobre la Fecundidad Adolescente By Cecilia Velázquez

  1. By: Francesco Caselli
    Abstract: The average Latin American country produces about 1 fifth of the output per worker of the US. What are the sources of these enormous income gaps? I report development-accounting results for Latin America. On average Latin America’s overall physical and human capital endowment relative to the USA is essentially identical to Latin America’s efficiency relative to the USA . In my main sample average relative capital and average relative efficiency are both roughly double actual average relative incomes. Hence, both capital gaps and efficiency gaps are very large: the average Latin American country has less than half the capital (human and physical) per worker of the US, and uses it less than half as efficiently. In assessing this evidence, it is essential to bear in mind that efficiency gaps contribute to income disparity both directly -- as they mean that Latin America gets less out of its capital -- and indirectly -- since much of the capital gap itself is likely due to diminished incentives to invest in equipment, structure, schooling, and health caused by low efficiency. The consequences of closing the efficiency gap would correspondingly be far reaching. Explaining the Latin American efficiency gap is therefore a high priority both for scholars and for policy makers.
    Keywords: Latin America; income gaps; development accounting
    JEL: O11
    Date: 2014–08
  2. By: Jorge Andrés Vélez Ospina; Jacobo Campo Robledo
    Abstract: The purpose of this paper is to identify the factors that affect the creation of new firms in Latin American countries. We take into consideration economic, political, social and technological factors which should also help governments realize the areas that we found to have the greatest impact. The study relies on data from international organizations from which we construct an Ordered Probit model. The results indicate that credit and government effectiveness enhance the probability of generating new business but it depended of business density.
    JEL: C23 C25 M13
    Date: 2014–03–20
  3. By: Stephen B. Kaplan (Department of Economics/Institute for International Economic Policy, George Washington University)
    Abstract: How does a shifting economic power balance between the United States and China affect the strategic choices of Latin American governments? During the last several decades, Latin America has often relied on a Western development model that aimed to attract global market capital. After excessive borrowing led to financial busts, however, many countries have sought to insulate themselves from market volatility. Rising terms of trade and a commodity boom, driven in part by China, helped buttress economic growth during much of the 2000s. But, what accounts for the growing variation in national policy approaches, ranging from ongoing market orthodoxy to heavy government intervention? I argue that governments that tap new Chinese income streams – both non-conditional lending and taxable commodity flows – have reduced their reliance on conditionality-linked Western financing, giving them more autonomy to use budget deficits to intervene in their economies. Employing a systematic comparative analysis of three Latin American countries – Argentina, Brazil, and Venezuela – I find that Chinese non-conditional funding endows governments with greater budgetary discretion, making austerity less likely. These findings offer important new insights for the study of globalization, the Latin American left, and China-Latin American relations, by helping explain the structural conditions that enable nations to veer from Western governance models.
    Keywords: Economic Policy, Latin America, China, Investment, Lending, Fiscal Policy, Economic Governance
    JEL: F00 F30 F40 H00 H30 H60 N10 N20 N16 N26 O10 O54 P50 P51
    Date: 2014–12
  4. By: César Carrera (Banco Central de Reserva del Perú)
    Abstract: The exchange rate is one of the most important prices in any open economy. Tracking deviations from its long-run value may provide important information for policymakers. One way to track such deviations is to compute the distribution of exchange-rate observed values and compare them with those of Benford’s law. I document such cases for 15 Latin American countries, for the two most widely traded currencies. Latin American countries are small open economies that are characterized for having different degrees of dollarization and intervention in the forex market. This is an alternative view of how these characteristics play a role with respect to an implied equilibrium exchange rate.
    Keywords: Exchange rate, Forex, Benford’s law
    JEL: C16 F31 F41
    Date: 2015–01
  5. By: Ana María Iregui-Bohórquez; Ligia Alba Melo-Becerra; María Teresa Ramírez-Giraldo
    Abstract: This paper uses the first wave of the Colombian Longitudinal Survey (ELCA) to analyze the relationship between individual health status and labor force participation. The empirical modeling strategy accounts for the presence of potential endogeneity between these two variables. The results show that there is a positive relationship between health and labor force participation in both directions, indicating that better health is likely to lead to a higher probability of participation in the labor market, and also that those who are in the labor market are more likely to report better health. Moreover, interesting differences arise when the database is further divided by gender and/or age groups. Our findings highlight the importance of public policy to guarantee good health conditions of the population which could also have a positive impact on labor productivity and consequently on long-run economic growth. Classification JEL: C35, C36, I10, J21
    Date: 2014–11
  6. By: Eric Nazindigouba KERE; Philippe DELACOTE (Institut National de la Recherche Agronomique (INRA)); Saraly ANDRADE DE SA
    Abstract: This paper investigates the mechanisms determining spatial interactions in deforestation, and its transmission channels, using data from Brazil. Our preliminary results confirm the hypothesis that deforestation in the Brazilian Amazon is characterized by complementarity, meaning that deforestation in a particular municipality tends to increase deforestation in its neighbors. We further show that cattle density, tend to be the most important factors determining the nature of spatial interactions between neighboring areas.
    Keywords: deforestation, Brazilian Amazon, Spatial and Dynamic interactions
    JEL: Q33 O13 C21
    Date: 2015–02
  7. By: Luis E. Arango; Lina Cardona-Sosa
    Abstract: This paper studies the behavior of the survival function of accruing loans during the slowdown experienced by the Colombian economy between January-2008 and March-2009 as documented by Alfonso et al. (2013). We use a dataset with information of different vintage loans between July-2007 and March-2014 from a private credit union that operates in Medellín, the second largest city in Colombia, and its metropolitan area. The analysis suggests that the survival function of accruing loans reduces before and during the slowdown event: if the probability of survival at month ten of a consumer credit vintage is below the 97.5% and below 95% at month fifteen, the probability of a future slowdown is not negligible.
    Keywords: accruing loans, nonperforming loans, survival function, economic slowdown
    JEL: C41 E32 E44 G21
    Date: 2015–01–14
  8. By: Ibanez, Marcela; Blackmann, Allen
    Abstract: According to advocates, eco-certification can improve developing country farmers’ environmental and economic performance. However, these notional benefits can be undercut by self-selection: the tendency of relatively wealthy farmers already meeting eco-certification standards to disproportionately participate. Empirical evidence on this matter is scarce. Using original farm-level survey data along with matching and difference-in-differences matching models, we analyze the producer-level effects of organic coffee certification in southeast Colombia. We find that certification improves coffee growers’ environmental performance. It significantly reduces sewage disposal in the fields and increases the adoption of organic fertilizer. However, we are not able to discern economic benefits.
    Keywords: organic certification, coffee, Colombia, difference-in-differences matching, Environmental Economics and Policy, Resource /Energy Economics and Policy, Risk and Uncertainty, Q13, Q20, O13, Q56,
    Date: 2015–01
  9. By: Leonardo Gasparini (CEDLAS-UNLP); Leopoldo Tornarolli (CEDLAS-UNLP)
    Abstract: In this review we expose the OECD Income Distribution Database to critical scrutiny, identifying its strengths and weaknesses. As it is almost inevitable in any critical assessment, we could not avoid being somewhat biased toward highlighting the limitations, without being similarly emphatic about the virtues of the database. To partly compensate for this asymmetry, we should make clear from the outset that this database is a remarkable undertaking that greatly contributes to the study of income inequality in the OECD countries and that deserves full praise for allowing researchers free and easy access to the data. The following comments should then be read bearing always in mind this positive assessment.
    Date: 2014–11
  10. By: Cecilia Velázquez (CEDLAS-UNLP)
    Abstract: Este artículo provee evidencia para Argentina acerca del impacto de extender la escolaridad obligatoria sobre la fecundidad adolescente. En el año 1993, el gobierno implementó una reforma educativa (Ley Federal de Educación) que, entre otras cosas, extendió los años de educación obligatorios de 7 a 10. La adopción de la Ley no se realizó de manera simultánea por parte de las provincias, brindando una fuente para identificar su efecto causal sobre la fecundidad adolescente. Los resultados sugieren una reducción en la tasa de fecundidad adolescente, especialmente en las jóvenes de entre 15 y 19 años de edad.
    JEL: I28 J13
    Date: 2015–02

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