nep-lam New Economics Papers
on Central and South America
Issue of 2016‒06‒25
six papers chosen by
Maximo Rossi
Universidad de la República

  1. Stock Market Volatility Spillovers: Evidence for Latin America By Santiago Gamba-Santamaria; Jose Eduardo Gomez-Gonzalez; Luis Fernando Melo-Velandia; Jorge Luis Hurtado-Guarin
  2. News and inflation expectation updates By Gerardo Licandro; Miguel Mello
  3. Social Capital: From the Gringoís Tale to the Colombian Reality By Ben Fine; Juan Pablo Dur·n Ortiz
  4. Inequality – Worldwide Trends and Current Debates By Stephan Klasen; Nathalie Scholl; Rahul Lahoti; Sophie Ochmann; Sebastian Vollmer
  5. Prices and Competition. Evidence from a Social Program By Emilio Aguirre; Pablo Blanchard; Fernando Borraz; Joaquín Saldain
  6. Job Creation in a Multi-Sector Labor Market Model for Developing Economies By Basu, Arnab K.; Chau, Nancy; Fields, Gary S.; Kanbur, Ravi

  1. By: Santiago Gamba-Santamaria; Jose Eduardo Gomez-Gonzalez (Banco de la República de Colombia); Luis Fernando Melo-Velandia (Banco de la República de Colombia); Jorge Luis Hurtado-Guarin (Banco de la República de Colombia)
    Abstract: We extend the framework of Diebold and Yilmaz [2009] and Diebold and Yilmaz [2012] and construct volatility spillover indexes using a DCC-GARCH framework to model the multivariate relationships of volatility among assets. We compute spillover indexes directly from the series of asset returns and recognize the time-variant nature of the covariance matrix. Our approach allows for a better understanding of the movements of financial returns within a framework of volatility spillovers. We apply our method to stock market indexes of the United States and four Latin American countries. Our results show that Brazil is a net volatility transmitter for most of the sample period, while Chile, Colombia and Mexico are net receivers. The total spillover index is substantially higher between 2008Q3 and 2012Q2, and shock transmission from the United States to Latin America substantially increased around the Lehman Brothers’ episode. Classification JEL: G01, G15, C32
    Keywords: Volatility spillovers, DCC-GARCH model, Stock market linkages, financial crisis
    Date: 2016–05
    URL: http://d.repec.org/n?u=RePEc:bdr:borrec:943&r=lam
  2. By: Gerardo Licandro (Banco Central del Uruguay); Miguel Mello (Banco Central del Uruguay)
    Abstract: Do inflation expectations react to news? In the last decade, Uruguay has resorted to heterodox practices along with inflation targeting to prevent the divergence of inflation, including price subsidies and agreements. Using data from a novel survey of firm's inflation expectations we study individual inflation expectation updates and the impact on individual expectation updates of news regarding monetary policy and other heterodox measures. To control for monetary policy stance we construct a qualitative index of monetary policy based on monetary policy communications. We construct several news indices for monetary policy and other measures. We find that price controls news tends to generate clusters of inflation expectations updates. Using several econometric techniques we are able to find that news about heterodox measures do affect inflation expectations with the expected sign.
    Keywords: Monetary transmission, inflation expectations, expectations channel
    JEL: E43 E52 E58
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:bku:doctra:2015008&r=lam
  3. By: Ben Fine (Department of Economics, SOAS, University of London, UK); Juan Pablo Dur·n Ortiz (MIT Displacement Research and Action Network, US)
    Abstract: The current idea of ísocial capitalî as driver of development and social change is not so much an illusion as a delusion. A justification for this emerges once power, class, conflict and context are explicitly brought to bear upon the social capital paradigm. This paper studies social capital in Colombia beginning with its initial definition proposed by Pierre Bourdieu in the early 1980s, with emphasis upon a contextualised reproduction and exercise of elite power. In this light, the real as opposed to the delusionary social capital can explain a great deal of the social and economic evolution of the country. For Colombia has been captured by the ísocial capitalî of national elites, drug dealers and multinational firms, ably abetted by the US government. It has launched a campaign of systematic violence against its citizenry under the paper-thin ideology of development and the war against drugs and terrorism in order to accrue profits from evictions and land expropriation.
    Keywords: development, evictions, land expropriation, social capital, war against drugs and terrorism
    JEL: O54
    Date: 2016–05
    URL: http://d.repec.org/n?u=RePEc:soa:wpaper:195&r=lam
  4. By: Stephan Klasen (Georg-August University Göttingen); Nathalie Scholl (Georg-August University Göttingen); Rahul Lahoti (Georg-August University Göttingen); Sophie Ochmann (Georg-August University Göttingen); Sebastian Vollmer (Georg-August University Göttingen)
    Abstract: Income inequality has been rising in many developing countries since the 1980s. At the same time, global income inequality has been roughly stable (or even falling slightly) and there is great heterogeneity in within-country inequality trends across countries and regions. Non-income inequality tends to have fallen, both within and between countries. There is no empirical evidence that rising inequality is an inevitable consequence of economic growth; similarly, the evidence of the impact of changes in inequality on growth is also inconclusive, although higher levels of inequality appear to be harmful for subsequent development. At the same time, reducing inequality is seen as important to promote greater fairness as well as to speed up poverty reduction. To study trends in inequality, we use a framework where income inequality is related to inequality in assets (land, labor, human capital, and physical capital), return to these assets, inequality in private transfers, and redistribution by the state. Trends in inequality are tied to these different drivers which differ greatly by country and over time. This framework also generates opportunities for policy intervention to tackle inequality. This will, however, depend greatly on the country. As a result, it is useful to start a policy framework with an inequality diagnostics to identify the most important drivers of levels and changes in inequality in a particular country; this is also an activity where bilateral development partners can play an important supporting role. When it comes to particular policy issues, some of the issues that have been discussed for a long time remain highly relevant, including land reform (where land is still an important asset), pro-poor educational policies, rural infrastructure, and a focus on improving agricultural productivity of poor farmers. At the same time, increasing the redistributive role of the state through a higher tax take (to be achieved via broadening the tax base, increasing tax compliance, increase resource taxes), and increasing pro-poor social transfers. On the international dimension, there is now a greater emphasis on assisting developing countries with fighting tax evasion and tax avoidance of firms and individuals. As a single bilateral donor, it is not easy to have a significant impact on inequality and an explicit aid program on inequality reduction might also be politically contentious. In principle, the potential is there for significantly affecting inequality via technical cooperation assisting states (and potentially non-state actors) in implementing an inequality-reducing agenda. Budget support and other systemic approaches can of course also support an overall agenda of reducing inequality, as can investment projects if they focus on the policy-areas for inequality reduction outlined here.
    Date: 2016–06–14
    URL: http://d.repec.org/n?u=RePEc:got:gotcrc:209&r=lam
  5. By: Emilio Aguirre (Ministerio de Desarrollo Social (Uruguay)); Pablo Blanchard (Ministerio de Desarrollo Social (Uruguay)); Fernando Borraz (Banco Central del Uruguay); Joaquín Saldain (Banco Central del Uruguay)
    Abstract: We use a micro-price dataset to analyze the impact on prices of a social program in Uruguay that allow the beneficiaries to purchase food, beverages and cleaning items exclusively in certain small retailers. We find that the beneficiaries pay significantly higher prices in relation to prices in other retailers. We find this result for the whole country with the exception of areas with the highest retailer density in the capital city, Montevideo.
    Keywords: market structure, market power, prices, social program; estructura de mercado, poder de mercado, precios, programa social
    JEL: D4 I3 L1
    Date: 2015
    URL: http://d.repec.org/n?u=RePEc:bku:doctra:2015002&r=lam
  6. By: Basu, Arnab K. (Cornell University); Chau, Nancy (Cornell University); Fields, Gary S. (Cornell University); Kanbur, Ravi (Cornell University)
    Abstract: This paper proposes an overlapping generations multi‐sector model of the labor market for developing countries with three heterogeneities – heterogeneity within self‐employment, heterogeneity in ability, and heterogeneity in age. We revisit an iconic paradox in a class of multi‐sector labor market models in which the creation of high‐wage employment exacerbates unemployment. Our richer setting allows for generational differences in the motivations for job search to be reflected in two distinct inverted U‐shaped relationships between unemployment and high‐wage employment, one for youth and a different one for adults. In turn, the relationship between overall unemployment and high‐wage employment is shown to be non‐monotonic and multi‐peaked. The model also sheds light on the implications of increasing high‐wage employment on self‐employed workers, who make up most of the world's poor. Non‐monotonicity in unemployment notwithstanding, increasing high‐wage employment has an unambiguous positive impact on high‐paying self‐employment, and an unambiguous negative impact on free‐entry (low‐wage) self‐employment.
    Keywords: multisector labor market, overlapping generations, poverty reduction, Harris‐Todaro model
    JEL: O17 I32
    Date: 2016–05
    URL: http://d.repec.org/n?u=RePEc:iza:izadps:dp9972&r=lam

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