nep-lam New Economics Papers
on Central and South America
Issue of 2017‒01‒01
four papers chosen by

  1. An Analysis of the Impact of External Financial Risks on the Sovereign Risk Premium of Latin American Economies By Rodrigo Alfaro; Carlos Medel; Carola Moreno
  2. Analytic Foundations: Measuring the Redistributive Impact of Taxes and Transfers By Ali Enami; Nora Lustig; Rodrigo Aranda
  3. Los determinantes y la persistencia de la sobreeducación en el Perú By Gonzalo Manrique; Gustavo Yamada
  4. The Impact of Taxes and Social Spending on Inequality and Poverty in El Salvador. By Margarita Beneke; Nora Lustig; Jose Andres Oliva

  1. By: Rodrigo Alfaro; Carlos Medel; Carola Moreno
    Abstract: This article presents a quantification of the response of the sovereign risk premium (EMBI) of a group of Latin American countries, to unexpected changes (shocks) in external financial variables. A vector autoregressions is estimated for each country (Colombia, Chile, Mexico, and Peru) in monthly frequency that includes China's and Brazil's EMBI, the global volatility index (VIX), plus the value of the dollar against a basket of currencies (Broad Index) and a proxy of the slope of the US Treasury yield curve (Spread US). The VIX and Broad Index shocks turn out to have a relatively homogenous effect on each country's EMBI, while shocks to the China and Brazil EMBI are more heterogeneous. For the case of Chile, we further study three alternative risk scenarios, incorporating the copper price as an additional variable. The most disruptive scenario at the time when the shock hits is the Volatility driven one. Nevertheless, it is the Emerging market's scenario (namely one with simultaneous shocks to China’ and Brazil’s EMBI) the one with the most harmful dynamics, as it dyes out slower. Finally, a Copper price bust scenario, in which the price of copper drops significantly in addition to a shock to the EMBI China, is the one with the least effect as the price of copper is relatively less affected by shocks to other variables, displaying lower spillovers.
    Date: 2016–12
  2. By: Ali Enami (Tulane University and CEQ Institute.); Nora Lustig (Stone Center for Latin American Studies, Department of Economics, Tulane University.); Rodrigo Aranda (Tulane University and CEQ Institute.)
    Abstract: This paper provides a theoretical foundation for analyzing the redistributive effect of taxes and transfers for the case in which the ranking of individuals by pre-fiscal income remains unchanged. We show that in a world with more than a single fiscal instrument, the simple rule that progressive taxes or transfers are always equalizing not necessarily holds, and offer alternative rules that survive a theoretical scrutiny. In particular, we show that the sign of the marginal contribution unambiguously predicts whether a tax or a transfer is equalizing or not.
    Date: 2016–11
  3. By: Gonzalo Manrique (GRADE); Gustavo Yamada (Universidad del Pacífico)
    Abstract: El presente estudio analiza los determinantes de la sobreeducación y su permanencia en el tiempo. Por un lado, con respecto al primer punto, se encuentra que el hecho de haber estudiado en una universidad de buena calidad reduce la probabilidad de experimentar el fenómeno de la sobreeducación en casi seis puntos porcentuales. Asimismo, haber estudiado en una universidad pública disminuye dicha posibilidad en más de ocho puntos porcentuales. Por otro lado, con respecto a la persistencia del problema, se encontró́ que en promedio 77% de trabajadores sobreeducados continúan en la misma situación de un año a otro. En general, la persistencia es alta pues más del 50% continúa sobreeducado incluso luego de siete años de permanencia en el mercado laboral.
    Keywords: sobreeducación, empleo, retorno laboral, mercado laboral
    JEL: C33 C35 I23 J23 J24 J44
    Date: 2016–12
  4. By: Margarita Beneke (FUSADES, El Salvador); Nora Lustig (Stone Center for Latin American Studies, Department of Economics, Tulane University.); Jose Andres Oliva (FUSADES, El Salvador)
    Abstract: We conducted a fiscal impact study to estimate the effect of taxes, social spending, and subsidies on inequality and poverty in El Salvador, using the methodology of the Commitment to Equity project. Taxes are progressive, but given their volume, their impact is limited. Direct transfers are concentrated on poor households, but their budget is small so their effect is limited; a significant portion of the subsidies goes to households in the upper income deciles, so although their budget is greater, their impact is low. The component that has the greatest effect on inequality is spending on education and health. Therefore, the impact of fiscal policy is limited and low when compared with other countries with a similar level of per capita income. There is room for improvement using current resources.
    Keywords: fiscal incidence, poverty, inequality, El Salvador
    JEL: D31 H22 I14
    Date: 2016–11

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