nep-lam New Economics Papers
on Central and South America
Issue of 2018‒05‒21
ten papers chosen by

  1. On the heterogeneous effects of market-access barriers: Evidence from small and large Peruvian exporters By Marco Fugazza; Marcelo Olarreaga; Cristian Ugarte
  2. The concentration of income at the top in Brazil, 2006-2014 By Pedro Herculano Guimarães Ferreira de Souza; Marcelo Medeiros
  3. Income inequality, growth and elite taxation in Brazil: new evidence combining survey and fiscal data, 2001?2015 By Marc Morgan
  4. A time-varying fiscal reaction function for Brazil By Cysne, Rubens Penha; Campos, Eduardo Lima
  5. The Transmission of Commodity Price Super-Cycles By Felipe Benguria; Felipe Saffie; Sergio Urzúa
  6. A history of inequality: top incomes in Brazil, 1926?2015 By Pedro H. G. Ferreira de Souza
  7. Firm-to-firm Connections in Colombian Imports By Andrew B. Bernard; Esther A. Bøler; Swati Dhingra
  8. Social Protection Systems in Latin America and the Caribbean: Peru By Milena Lavigne
  9. Social Protection Systems in Latin America and the Caribbean: Paraguay By Milena Lavigne
  10. Inter-Temporal Sustainability of Fiscal Redistribution: A Methodological Framework By Jose Maria Fanelli

  1. By: Marco Fugazza; Marcelo Olarreaga; Cristian Ugarte
    Abstract: We examine the extent to which market-access barriers in Latin America affect small and large Peruvian exporters to the region. Using a dataset that allows us to distinguish between tariffs and different types of non-tariff measures introduced by Latin American countries between 2000 and 2014, we find that large Peruvian exporters benefit rather than lose from the introduction of tariffs and non-tariff measures in their destination markets. Their export value increases and the probability that they exit the export sector decreases as they face new market-access barriers abroad. The reverse is true for small exporters, which are hurt by more stringent market-access barriers.
    Keywords: Non-Tariff Measures, Tariffs, Firm heterogeneity.
    JEL: F13
    Date: 2018–05–10
  2. By: Pedro Herculano Guimarães Ferreira de Souza (IPC-IG); Marcelo Medeiros (IPC-IG)
    Abstract: "Extreme inequality in Brazil is self-evident. The historian José Murilo de Carvalho emblematically chose to end his book on the history of citizenship in Brazil with the severe diagnosis that 'inequality is the slavery of today, the new cancer that hinders the constitution of a democratic society' (Carvalho 2001, 229). Normative prescriptions aside, not even historical opponents of redistributive policies, such as Mário Henrique Simonsen, failed to recognise?even if reluctantly?income inequality as 'undesirably high', and as a source of 'pained conscience' (Simonsen 1972, 57; 59)". (...)
    Keywords: concentration, income, top, Brazil, 2006, 2014
    Date: 2017–11
  3. By: Marc Morgan (IPC-IG)
    Abstract: "This paper analyses the pre-tax inequality in the income that individuals actually receive in Brazil and the role of the personal income tax in regulating these incomes. We produce a new distributional series of fiscal income, consistently combining annual and nationally representative household survey data with detailed information on income tax declarations recently released by the Brazilian Federal Tax Office. Our results provide a sharp upward revision of the official estimates of inequality in Brazil but maintain the decreasing inequality trends, even though they are less pronounced than previously measured. The exceptionally large concentration of income at the top is noteworthy, as is its relative stability over time. The income share of the wealthiest 10 per cent of the population fell from 54.6 per cent to 53.0 per cent of pre-tax fiscal income between 2001 and 2015, while the share of the poorest 50 per cent of the population rose from 10.6 per cent to 12.6 per cent. Brazils squeezed middle 40 per cent of the distribution experienced a slight drop in its share, from 34.8 per cent to 34.4 per cent. Despite strong average income growth, the poorest 50 per cent only made moderate gains, which came at the expense of smaller shares for the middle and the top. Over the short to medium term, it is the level of average income of the bottom that matters more than its growth. We show that the role of the personal income tax in regulating incomes in Brazil is very limited, because the majority of the income of elites in Brazil is not subject to the tax. This explains the lower effective tax liability that is observed for upper income groups and illustrates that the personal income tax is not a progressive policy tool in Brazil, violating the principles of horizontal equity and vertical equity. This motivates the creation of a simplified and comprehensive personal income tax that would incorporate all income categories along a single or dual tax regime. (...)
    Keywords: Income, inequality, growth, elite, taxation, Brazil, new evidence, combining, survey, fiscal data, 2001, 2015
    Date: 2018–02
  4. By: Cysne, Rubens Penha; Campos, Eduardo Lima
    Abstract: This paper evaluates the sustainability of public debt in Brazil using monthly data from January 2003 to June 2016, based on the estimation of fiscal reaction functions with time-varying coefficients. Three estimation methods are considered: Kalman filter, penalized spline smoothing and time-varying cointegration. Besides indicating that the reaction of the primary deficit to variations in the debt/GDP ratio declined over most of the period analyzed, all these methods lead to the conclusion that the Brazilian public debt, given the parameters then in force, reached an unsustainable trajectory in the last years of the sample.
    Date: 2018–05–08
  5. By: Felipe Benguria; Felipe Saffie; Sergio Urzúa
    Abstract: We examine the channels through which commodity price super-cycles affect the economy. Exploiting regional variation in exposure to commodity price shocks and administrative firm-level data from Brazil we disentangle two transmission channels. Higher commodity prices increase domestic demand (wealth channel), disproportionately benefiting nonexporters, and induce wage increases (cost channel) especially among unskilled workers, hurting unskilled-intensive industries. We introduce a dynamic model with heterogeneous firms and workers to quantify these mechanisms and evaluate welfare. The cost channel explains two-thirds of intersectoral labor reallocation, while the wealth channel explains two-thirds of the labor reallocation between exporters and nonexporters.
    JEL: E32 F16 F42
    Date: 2018–04
  6. By: Pedro H. G. Ferreira de Souza (IPC-IG)
    Abstract: "This paper uses income tax tabulations to estimate top income shares in Brazil over the long term. Between 1926 and 2015, the concentration of income at the top remained very high, following a sine wave trend: top shares ebbed and flowed over time, frequently in tandem with political and institutional disruptions. There is some evidence in favour of Williamson's 'missed levelling' hypothesis regarding the origins of Latin America's exceptionally high levels of inequality, but the recent decline in inequality is cast in a more dubious light, since top income shares have remained quite stable since 2000 and the 'tax-adjusted' Gini coefficients show a smaller and shorter, though still sizeable, decrease. The nature of the political regime matters, but democracy is not a sufficient condition for redistribution. Brazil's tumultuous political history suggests top income shares change substantially mostly during political-institutional crises, when the typical quid pro quo of more liberal regimes in normal times collapses. The analysis is complemented by international comparisons and a discussion of the role of institutions in shaping inequality". (...)
    Keywords: history, inequality, top, incomes, Brazil, 1926, 2015
    Date: 2018–04
  7. By: Andrew B. Bernard; Esther A. Bøler; Swati Dhingra
    Abstract: The vast majority of world trade flows is between firms. Only recently has research in international trade started to emphasize the importance of the connections between exporters and importers both in aggregate trade flows and in the negative relationship between trade and geographic distance. This chapter documents the role of firm-to-firm connections in trade flows and the formation and duration of these importer-exporter relationships. Using customs data from Colombia for 1995-2014, we are able to identify both the Colombian importing firm and the foreign exporter in every Colombian import and export transaction. We document both the nature of these bilateral trading relationships and their evolution over time.
    JEL: F14
    Date: 2018–04
  8. By: Milena Lavigne (IPC-IG)
    Abstract: "In the past decade Peru has undergone great economic and social changes.The country has experienced rapid economic growth, accompanied by increased social policy efforts. Indeed, since the 2000s, the Peruvian State has adopted important innovations for the provision of basic social services in the areas of health and education. Efforts have also been made to develop and expand poverty reduction programmes, such as Juntos, as well as noncontributory social pensions for elderly people living in poverty." (...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Peru
    Date: 2018–04
  9. By: Milena Lavigne (IPC-IG)
    Abstract: "Since its transition to democracy at the beginning of the 1990s, Paraguay has made considerable progress in confronting poverty and social inequality. The fact that poverty has become a major issue on the public agenda since then has furthered the development of social protection and promotion programmes. The implementation of social policies has focused not only on education, health and pensions, but also on youth, employment protection and housing, showing a new approach to poverty and vulnerability". (...)
    Keywords: Social Protection Systems, Latin America, Caribbean, Paraguay
    Date: 2018–04
  10. By: Jose Maria Fanelli (Universidad de Buenos Aires, University of San Andrés, University of San Andrés)
    Abstract: The chapter develops a methodology to analyze the inter-temporal implications of "fiscal interventions" – i.e., taxes and transfers that are intended to produce changes in income distribution and/or protect the poor. These concern both fiscal sustainability and the distribution of wealth across generations. First, we use the income concepts developed by the CEQ project to define fiscal interventions and show what the sustainability conditions are for a given set of fiscal interventions. We also examine the role of depleting natural capital and the consequences of assuming that the contributions to social security are forced savings rather than a tax. Second, we investigate the relationship between fiscal sustainability, fiscal interventions, and income strata. Third, we address the demographic dimension and study the relationship between fiscal interventions and the cross-cohort distribution of income and wealth. The methodology utilizes the NTA (National Transfers Accounts) concepts to model the demographic transition. Finally, we extend the methodology to integrate strata distribution and the cohort distribution of income and wealth. The Annex presents Excel files with empirical evidence on fiscal sustainability.
    Keywords: fiscal policy, demographics
    JEL: E62 J11
    Date: 2018–03

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