nep-lam New Economics Papers
on Central and South America
Issue of 2015‒10‒04
thirteen papers chosen by

  1. A Stochastic Volatility Model with GH Skew Student’s t-Distribution: Application to Latin-American Stock Returns By Patricia Lengua; Cristian Bayes; Gabriel Rodríguez
  2. Tobacco Cultivation in Latin America By Jorge, Tovar
  3. Fiscal Rules, Monetary Rules and External Shocks in a Primary-Export Economy: a Model for Latin America and the Caribbean By Waldo Mendoza
  4. Modeling Latin-American Stock Markets Volatility: Varying Probabilities and Mean Reversion in a Random Level Shifts Model By Gabriel Rodríguez
  5. Youth out of school and out of work in Latin America : a cohort approach By Székely,Miguel; Karver,Jonathan George
  6. Growth and distribution in Brazil the 21st century: revisiting the wage-led versus profit-led debate By Laura Carvalho; Fernando Rugitsky
  7. Inequality of Opportunity in Health and Cognitive Abilities: The Case of Chile. By Rafael Carranza; Daniel Hojman
  8. Financial inclusion from the perspective of social innovation: The case of Colombia By Maria Luisa Jaramillo Gomez
  9. Beyond qualifications : returns to cognitive and socio-emotional skills in Colombia By Acosta,Pablo Ariel; Muller,Noel; Sarzosa,Miguel Alonso
  10. Human Capital Persistence and Development By Claudio Ferraz; Rodrigo Reis Soares; Rudi Rocha
  11. Vertical Collective Action: Addressing Vertical Asymmetries in Watershed Management By Cárdenas, Juan-Camilo; Rodriguez, Luz Angela; Johnson, Nancy
  12. Valoración Económica del Subsistema de Áreas Marinas Protegidas en Colombia: Un estudio enfocado a Turistas Especializados By Barrera, Camila Andrea; Maldonado, Jorge Higinio
  13. Land Reform, Latifundia and Social Development at Local Level in Colombia, 1961-2010 By Faguet, Jean-Paul; Sánchez, Fabio; Villaveces, Juanita

  1. By: Patricia Lengua (Departamento de Economía de la Pontificia Universidad Católica del Perú); Cristian Bayes (Pontificia Universidad Católica del Perú); Gabriel Rodríguez (Departamento de Economía de la Pontificia Universidad Católica del Perú)
    Abstract: This paper presents an empirical study of a stochastic volatility (SV) model for daily stocks returns data of a set of Latin-American countries (Argentina, Brazil, Chile, Mexico and Peru) for the sample period 1996:01-2013:12. We estimate SV models incorporating both leverage e§ects and skewed heavy-tailed disturbances taking into account the GH Skew Studentís t-distribution using the Bayesian estimation method proposed by Nakajima and Omori (2012). A model comparison between the competing SV models with symmetric Studentís t-disturbances is provided using the log marginal likelihoods and a prior sensitivity analysis is also provided. The results suggest that there are leverage e§ects in all returns considered but there is not enough evidence for the case of Peru. Furthermore, skewed heavy-tailed disturbances are conÖrmed only for Argentina, symmetric heavy-tailed disturbances for Mexico, Brazil and Chile, and symmetric Normal disturbances for Peru. Furthermore, we Önd that the GH Skew Studentís t-disturbance distribution in the SV model is successful in describing the distribution of the daily stock return data for Peru, Argentina and Brazil over the traditional symmetric Studentís t-disturbance distribution. JEL Classification-JEL: C11, C58
    Keywords: Stochastic Volatility, Generalized Hyperbolic Skew Studentís t-Distribution, Bayesian Estimation, Markov Chain Monte Carlo, Stock Returns, Latin American Stock
    Date: 2015
  2. By: Jorge, Tovar
    Abstract: This paper evaluates the importance of tobacco cultivation in Latin America. To this end the main variables of the sector will be analyzed, such as the quantity and value of production, the number of cultivated hectares and crop yields. The value of the sector as export strength is also studied. In addition, a comparison of direct employment generated by tobacco cultivation in tobacco countries of Latin America is created based on different sources. The results show that the production of Latin-American countries as a whole has been increasing in recent years, making the share of production of this continent close to 16% of world production. Argentina and Brazil stand out for their production to be placed among the ten largest producers in the world. The extension of cultivated area in the region reaches 13.55% of the area dedicated to tobacco in the world. The increase in production has driven a growth in the productivity of the product with a growing trend for the past several lustrums. This positive trend has been accompanied by an increase in prices paid to the grower, particularly since 2007. It is then a sector with a significant impact on the region. Tobacco cultivation has the capacity of generating 650,000 direct jobs and exporting U.S. $ 3,788 million annually. Considering the analysis only involves direct employment, these figures are very significant.
    Keywords: Tobacco Cultivation, Direct Employment in Tobacco, International Development, Labor and Human Capital, Production Economics, Q10, Q18, O54,
    Date: 2014–03–10
  3. By: Waldo Mendoza (Departamento de Economía de la Pontificia Universidad Católica del Perú)
    Abstract: The macroeconomic performance of Latin America and the Caribbean (LAC) is closely linked to the evolution of the world economy. The lost decade of the eighties cannot be explained by abstracting it from the deterioration in the terms of trade and the rising interest rates in the developed world that occurred during that period. Nor can the golden decade of 2002 to 2011 be understood without considering the significant improvement in the terms of trade and the considerable reduction in international interest rates. Finally, it is not possible to understand the slowdown in economic growth in LAC since 2011 by ignoring the deterioration of the region's terms of trade and rising global interest rates. This article discusses the connections to the global economy of a small, open, primaryexport economy dependent on external financing, where monetary policy operates under an inflation-targeting scheme; the reference rate for interbank markets is a policy instrument; and fiscal policy works by imposing a limit on the fiscal deficit as a percentage of GDP. The model allows us to evaluate the effects of changes in the prices of export commodities and global interest rates, as well as the impact of monetary and fiscal policies on output, price level, exchange rate, and the domestic interest rate. JEL Classification-JEL: E1, E5, E6
    Keywords: Fiscal rules, monetary rules, external shocks, Latin America and the Caribbean
    Date: 2015
  4. By: Gabriel Rodríguez (Departamento de Economía de la PUC del Perú)
    Abstract: Following Xu and Perron (2014), we applied the extended RLS model to the daily stock market returns of Argentina, Brazil, Chile, Mexico and Peru. This model replaces the constant probability of level shifts for the entire sample with varying probabilities that record periods with extremely negative returns; and furthermore, it incorporates a mean reversion mechanism with which the magnitude and the sign of the level shift component will vary in accordance with past level shifts that deviate from the long-term mean. Therefore, four RLS models are estimated: the basic RLS, the RLS with varying probabilities, the RLS with mean reversion, and a combined RLS model with mean reversion and varying probabilities. The results show that the estimated parameters are highly signiÖcant, especially that of the mean reversion model. An analysis is also performed of ARFIMA and GARCH models in the presence of level shifts, which shows that once these shifts are taken into account in the modeling, the long memory characteristics and GARCH e§ects disappear. Our forecasting analysis conÖrms that the RLS models are more accurate than other classic long-memory models. Resumen Siguiendo el trabajo de Xu y Perron (2014), en este documento se aplica el modelo extendido de cambios de nivel aleatorios (RLS) a los retornos diarios de los mercados bursátiles de Argentina, Brasil, Chile, Mexico y Perú. A diferencia del modelo RLS básico, en este modelo se usan probabilidades cambiantes asociadas a periodos de retornos extremadamente negativos y además se incorpora un mecanismo de reversión a la media el cual depende de los cambios de nivel pasados y de las desviaciones de la media de largo plazo. Así, se estiman cuatro modelos de cambios de nivel aleatorios: el modelos RLS básico, el modelo RLS con probabilidades variantes, el modelo RLS con reversión a la media y …finalmente, el modelo RLS que combina los dos aspectos ya mencionados. Los resultados muestran que los coe…cientes estimados son signi…cativos, en especial cuando se usa el modelo RLS con reversión a la media. Asimismo, se realizan estimaciones de modelos ARFIMA y GARCH a las series de volatilidad a las cuales se le ha sustraído el componente de cambios de nivel. Los resultados, muestran que una vez que dichos componentes son tomados en cuenta, las características de larga memoria y efectos GARCH desaparecen. Finalmente, un análisis de predicción es proporcionado el cual confi…rma que los modelos RLS son más e…ficientes que otros modelos clásicos de larga memoria. JEL Classification-JEL:
    Keywords: Random Level Shifts Model, Volatility, Long Memory, GARCH, Latin-American Stock Markets, Varying Probabilities, Mean Reversion, Forecasting, Larga Memoria, Mercados Bursátiles de América Latina, modelo con Cambios de Nivel Aleatorios, Predicción, Probabilidades Variantes, Reversión a la Media, Volatilidad
    Date: 2015
  5. By: Székely,Miguel; Karver,Jonathan George
    Abstract: This paper examines the phenomena of high rates of youth that are out of school and out of work in Latin America. The analysis pursues a dynamic approach by constructing a pseudo-panel from 234 household surveys for 18 countries in the region that allow tracing the life cycle trajectories of different cohorts over time. The trajectories are associated with a series of variables characterizing the household, community, and macro environment in which schooling and labor market participation decisions take place. The most important result obtained is that the persistently high rates of being out of school and out of work among males are strongly associated with greater labor force participation by women, which can be generating a ?crowding out? effect against men, given slow job creation rates across the region. The analysis also explores the possibility of scarring effects, and finds that higher shares of out of school and out of work youth at ages 15?20 years are associated with lower wages for the same cohorts later in life, at ages 35?40 years, for males and females. As for employment prospects, the analysis finds scarring effects only for females, with greater out of school and out of work youth shares being related to lower proportions of women in the labor market later in the life cycle.
    Keywords: Labor Markets,Housing&Human Habitats,Youth and Government,Labor Policies,Adolescent Health
    Date: 2015–09–28
  6. By: Laura Carvalho; Fernando Rugitsky
    Abstract: In the 2000s, several Latin American economies, and Brazil in particular, have engaged in relatively successful attempts to combine higher economic growth and lower income inequality. As the Brazilian economy slowed down in the last few years, the sustainability of this growth model has been put into question. After studying the impact of different redistributive policies (like minimum wage and income transfers) on the personal and functional distributions of income in Brazil, the paper discusses the response of aggregate consumption, investment and net exports – as well as of the economy’s productive structure and inflation rate – to the changes in income distribution itself and other relevant factors. The analysis allows us both to draw lessons to the Neo-Kaleckian literature on demand regimes, pointing towards the importance of some theoretical extensions, and to examine future prospects for the Brazilian economy.
    Keywords: demand regimes; functional and personal income distribution; Brazilian economy
    JEL: E11 E25 D31
    Date: 2015–09–21
  7. By: Rafael Carranza; Daniel Hojman
    Abstract: This paper studies inequality of opportunity in health in Chile. Following Roemer’s approach to equality of opportunity, we separate the effect of circumstances and efforts -healthy behaviors- on self-assessed health. In addition to parental and family background, our set of circumstances includes a proxy of numeracy skills. We find that circumstances explain nearly 40 percent of the variance of health outcomes, four times the contribution of efforts. More than one third of the contribution of circumstances is due to numeracy skills, similar to the contribution of parental education. Parents’ longevity is also important but its contribution is smaller. The overall influence of circumstances on inequality is substantial, ranging from 62 to more than 90 percent depending on the inequality index used. Overall, we find that health inequality is higher in Chile than in European countries and the contribution of unequal opportunities to inequality is at least as large. Our results also highlight the importance of cognitive ability on health inequality.
    Date: 2015–10
  8. By: Maria Luisa Jaramillo Gomez (Universidad de La Sabana)
    Abstract: Financial inclusion has become a crucially important factor in debates on economic inequality posing challenges to the financial systems of countries around the world. Nowadays governments and banks are concerned about creating products that allow access to wide sectors of the population. The creation of banking products by the financial sector for people with low incomes tends to lead to improvements in the quality of life of vulnerable parts of the population. In countries with notable social and economic inequalities financial inclusion is a key aspect for equitable economic growth. This study is based on the case of Colombia, which is a country with a strong record of economic growth over the past decade. Nevertheless, corruption, unemployment, and poverty contribute to uncertainty regarding the country’s future growth prospects. This study wants to explain the situation of financial exclusion and financial inclusion with respect to the Colombian case. Financial inclusion is going to be studied from the perspective of social innovation.
    Keywords: Colombia, financial exclusion, financial inclusion, social innovation.
    JEL: A10
  9. By: Acosta,Pablo Ariel; Muller,Noel; Sarzosa,Miguel Alonso
    Abstract: This paper examines the relationship between individuals? skills and labor market outcomes for the working-age population of Colombia?s urban areas. Using a 2012 unique household survey, the paper finds that cognitive skills (aptitudes to perform mental tasks such as comprehension or reasoning) and socio-emotional skills (personality traits and behaviors) matter for favorable labor market outcomes in the Colombian context, although they have distinct roles. Cognitive skills are greatly associated with higher earnings and holding a formal job or a high-qualified occupation. By contrast, socio-emotional skills appear to have little direct influence on these outcomes, but play a stronger role in labor market participation. Both types of skills, especially cognitive skills, are largely associated with pursuing tertiary education. The analysis applies standard econometric techniques as a benchmark and structural estimations to correct for the measurement error of skill constructs.
    Keywords: Labor Markets,Education For All,Educational Sciences,Effective Schools and Teachers,Primary Education
    Date: 2015–09–30
  10. By: Claudio Ferraz (Department of Economics PUC-Rio); Rodrigo Reis Soares (São Paulo School of Economics); Rudi Rocha (UFRJ - Instituto de Economia)
    Abstract: This paper examines the role of human capital persistence in explaining long-term development. We exploit variation induced by a state-sponsored settlement policy that attracted a pool of immigrants with higher levels of schooling to particular regions of Brazil in the late 19th and early 20th century. We show that municipalities that received settlements experienced increases in schooling that persisted over time. One century after the policy, localities that received state-sponsored settlements had higher levels of schooling and income per capita. We provide evidence that long-run effects were driven by persistently higher supply and use of educational inputs and shifts in the structure of occupations towards skill-intensive sectors.
    Date: 2015–06
  11. By: Cárdenas, Juan-Camilo; Rodriguez, Luz Angela; Johnson, Nancy
    Abstract: Watersheds and irrigation systems have the characteristic of connecting people vertically by water flows. The location of users along these systems defines their role in the provision and appropriation of water which adds complexity to the potential for cooperation. Verticality thus imposes a challenge to collective action. This paper presents the results of field experiments conducted in four watersheds of Colombia (South America) and Kenya (East Africa) to study the role that location plays in affecting trust and cooperation in decisions regarding to provision and appropriation of water. We recruited 639 watersheds inhabitants from upstream, midstream and downstream locations in these basins and conducted two field experiments: the Irrigation Game and the Water Trust Game. The Irrigation Game (Cardenas et al, 2013; Janssen et al, 2011) involves decisions regarding to the provision and appropriation of water where the location in the system is randomly assigned. The Water Trust Game is an adaptation of the trust game (Berg et al 1995) framed around water and economic compensation flows where we explicitly reveal the actual upstream or downstream location of the two players. The results of the two games show that location affect water provision and distribution and that reciprocity and trust are key motivations for upstream-downstream cooperation. Yet, both experiments also suggest that the lack of trust from downstream players towards upstream players may restrict the possibilities of cooperation among watershed users.
    Keywords: Collective Action, Verticality, Watersheds, Field Experiments, Irrigation Game, Trust Game, Water Trust Game, Payments for Environmental Services, Colombia, Kenya., Environmental Economics and Policy, Productivity Analysis, Q0, Q2, C9,
    Date: 2015–01
  12. By: Barrera, Camila Andrea; Maldonado, Jorge Higinio
    Keywords: Valoración contingente, buzos recreativos, ecosistemas marinos y costeros, Colombia., Environmental Economics and Policy, Q25, Q26, Q51, C83,
    Date: 2013–11–16
  13. By: Faguet, Jean-Paul; Sánchez, Fabio; Villaveces, Juanita
    Abstract: The paper analyzes the effects of land reform on social development –poverty and land distribution- at the local level. Land reform in Colombia, understood as the allocation of public land to peasant, has granted 23 million hectares which comprises around 20% of Colombian territory and about 40% of usable productive land. Theoretically, the net impact of land reform on development is the combination of a poverty effect and a land distribution effect. Our findings suggest that land reform from 1961 onwards has slightly reduced poverty and mildly improved land distribution. Nonetheless, municipalities with strong presence of latifundia prior to 1961 have experienced both a slower drop in poverty and a weaker improvement of land distribution. This paper finds that prevalence of latifundia partially reduces the positive effect of land reform in promoting social development.
    Keywords: Land reform, land distribution, latifundia, poverty, local economic development, Colombia, Labor and Human Capital, Political Economy, Q15, N16, H27,
    Date: 2015–02

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