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on Central and South America |
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Issue of 2021‒11‒22
five papers chosen by |
| By: | Paolo Manasse; Ugo Panizza; Francesca G Caselli; Matilde Faralli |
| Abstract: | This paper studies whether countries benefi t from servicing their debts during times of widespread sovereign defaults. Colombia is typically regarded as the only large Latin American country that did not default in the 1980s. Using archival research and formal econometric estimates of Colombia's probability of default, we show that in the early 1980s Colombia's fundamentals were not signifi cantly different from those of the Latin American countries that defaulted on their debts. We also document that the different path chosen by Colombia was due to the authorities' belief that maintaining a good reputation in the international capital market would have substantial long-term payoffs. We show that the case of Colombia is more complex than what it is commonly assumed. Although Colombia had to re-profi le its debts, high-level political support from the US allowed Colombia do to so outside the standard framework of an IMF program. Our counterfactual analysis shows that in the short to medium run, Colombia benefit ted from avoiding an explicit default. Speci fically, we find that GDP growth in the 1980s was higher than that of a counterfactual in which Colombia behaved like its neighboring countries. We also test whether Colombia's behavior in the 1980s led to long-term reputational benefi ts. Using an event study based on a large sudden stop, we find no evidence for such long-lasting reputational gains. |
| Keywords: | Sovereign Debt; Default; Reputation |
| Date: | 2021–09–10 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/233&r= |
| By: | Jorge Alvarez; Carlo Pizzinelli |
| Abstract: | This paper documents the impact of the COVID-19 pandemic and associated lockdowns on the Colombian labor market using household micro-data. About a quarter of employment was temporarily disrupted at the height of the first pandemic-induced lockdown in 2020. Women, the young, and the less educated were the most affected groups. Since then, a remarkable recovery, led by a rebound in informal employment, has taken place. By adjusting both employment levels and hours faster, the informal sector acted as an important margin of adjustment, particularly in those industries most affected by the first lockdown. The informal sector also appears to have played a role in decreasing the sensitivity of aggregate employment to more recent lockdowns in 2021, as the economy has learned to cope with pandemic restrictions, although the possibility of higher informality rates becoming embedded remains an substantial downside risk for long-term productivity. |
| Keywords: | Colombia, COVID-19, Labor Markets, Informality. |
| Date: | 2021–09–17 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/235&r= |
| By: | Rossi, Martin |
| Abstract: | This article analyzes the relative performance of recently privatized Latin American electricity distribution utilities. Empirical results show that privatized firms are more efficient in their use of labor and have higher labor productivity growth rates than public or cooperative companies. There is also evidence of increasing returns to scale. |
| Keywords: | Ownership, Efficiency, Technical Change, Input Requirement Function |
| JEL: | L94 O30 |
| Date: | 2021–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110534&r= |
| By: | Rossi, Martin |
| Abstract: | I exploit a unique historical event to explore the causal relationship between individual wealth and posterior political power. Shortly after the foundation of Buenos Aires, plots of land in the outskirts of the city were randomly assigned to all heads of household that participated in the expedition. Using this random allocation of land as a source of exogenous variation on individuals’ wealth, I find that wealth causes political power. I also explore possible mechanisms and find support for the hypothesis that wealth signals (or improves) ability. |
| Keywords: | elites; political dynasties; representative political power; natural experiment |
| JEL: | B00 J45 N46 |
| Date: | 2021–11–07 |
| URL: | http://d.repec.org/n?u=RePEc:pra:mprapa:110532&r= |
| By: | Moya Chin |
| Abstract: | Electoral rules determine how voters' preferences are aggregated and translated into political representation, and their design can lead to the election of representatives who represent broader or narrower constituencies. Relying on a regression discontinuity design, I contrast single- and two-round elections in Brazilian municipal races. Two-round elections use two rounds of voting to elect a winner, ensuring that the eventual winner obtains at least 50% of the vote. Theoretically, this can provide incentives for candidates to secure a broader base of support. Consistent with this, I show that in two-round elections, candidates represent a more geographically diverse group of voters, public schools have more resources, and there is less variation in resources across public schools. Effects appear to be driven by strategic responses of candidates, rather than differential entry into races. These results suggest that two-round elections can lead candidates to secure broader bases of support and to distribute public goods more broadly. |
| Keywords: | Electoral institutions, voting theory, political responsiveness, political favoritism, education resources; candidate maximization problem; two-round election; voter threshold; appendix C. theory appendix; concentration of voter; swingable voter; Infrastructure; Income; Budget planning and preparation |
| Date: | 2021–08–27 |
| URL: | http://d.repec.org/n?u=RePEc:imf:imfwpa:2021/227&r= |