nep-lam New Economics Papers
on Central and South America
Issue of 2022‒10‒31
three papers chosen by

  1. The Macroeconomic Effects of Macroprudential Policy : Evidence from a Narrative Approach By Rojas Alvarado,Luis Diego; Vegh,Carlos; Vuletin,Guillermo Javier
  2. Why Student Aid Matters ? Roadblocks to the Transition into Higher Education forForced Migrants in Chile By Blanco,Christian; Meneses,Francisco Jalles; Villamizar-Chaparro,Mateo
  3. Fooled by the Cycle : Permanent versus Cyclical Improvements in Social Indicators By Camarena Fonseca,Jose Andree; Galeano,Luciana Maria; Morano,Luis; Puig,Jorge Pablo; Riera-Crichton,Daniel; Vegh,Carlos; Venturi,Lucila; Vuletin,Guillermo Javier

  1. By: Rojas Alvarado,Luis Diego; Vegh,Carlos; Vuletin,Guillermo Javier
    Abstract: This paper analyzes the macroeconomic effects of macroprudential policy—in the form of legalreserve requirements—in three Latin American countries (Argentina, Brazil, and Uruguay). To correctly identifyinnovations in changes in legal reserve requirements, a narrative approach—based on contemporaneous reports from theIMF and central banks in the spirit of Romer and Romer (2010)—is developed in which each change is classified intoendogenous or exogenous to the business cycle. This distinction is critical in understanding the macroeconomiceffects of reserve requirements. In particular, while output falls in response to exogenous increases in legal reserverequirements, it is not affected when using all changes and relying on traditional time-identifying strategies. Thisbias reflects the practical relevance of the misidentification of endogenous countercyclical changes inreserve requirements. The empirical frontier is also pushed along two important dimensions. First, in measuring legalreserve requirements, both the different types of legal reserve requirements in terms of maturity and currency ofdenomination as well as the structure of deposits are taken in account. Second, since in practice reserve requirementpolicy is tightly linked to monetary policy, the study jointly analyze the macroeconomic effects of changes incentral bank interest rates. To properly identify exogenous central bank interest rate shocks, the Romer and Romer(2004) strategy is used.
    Date: 2022–08–24
  2. By: Blanco,Christian; Meneses,Francisco Jalles; Villamizar-Chaparro,Mateo
    Abstract: Education is a powerful tool for social mobility and cultural integration. However, it is oneof the largest hurdles for migrants—particularly for forcefully displaced migrants, given their more vulnerablecondition and lack of resources to pay for private education. This paper explores educational gaps betweenmigrants and natives in Chile, a country that provides free public education to newcomers. The paper analyzes anadministrative data set that includes all students in the Chilean educational system and follows students from 2017 to2018. Using a research discontinuity design around the cut-off for financial aid to tertiary education, this paperinvestigates whether access to financial aid generatesincentives for forced migrants to enroll in tertiary education. This research confirms previous findings thatshow that migrants have lower advancement and enrollment rates than natives at every school level. Moreover, it findsthat financial aid applications constitute a major roadblock preventing migrant students from accessing higher education.Furthermore, the paper presents suggestive evidence showing that the interaction between the type of school (vocationalvs. technical) and the migrant condition affects applications for financial aid.
    Date: 2022–06–23
  3. By: Camarena Fonseca,Jose Andree; Galeano,Luciana Maria; Morano,Luis; Puig,Jorge Pablo; Riera-Crichton,Daniel; Vegh,Carlos; Venturi,Lucila; Vuletin,Guillermo Javier
    Abstract: This paper studies the time series behavior of a set of widely-used social indicators anduncovers two important stylized facts. First, not all social indicators are created equal in terms of the importance ofcyclical fluctuations. While some social indicators such as the unemployment rate and monetary poverty show largecyclical fluctuations, other social measures such as the Human Development Index are, by construction, dominated bylong-run trends. Second, interestingly, yet not surprisingly, a large part of the cyclical fluctuations insocial indicators can be explained by cyclical changes in income (proxied by real GDP per capita). For this reason,countries with large cyclical income volatility exhibit, in turn, large cyclical changes in some of these socialindicators (particularly in those indicators that are more prone to cyclical fluctuations). Since cyclical incomevolatility is much larger in the developing world, these two critical stylized facts raise fundamental issues regardingthe duration of improvements in social indicators (like the ones observed in many developing countries during the lastcommodity super-cycle). After a detailed conceptual and methodological discussion of these issues, and relying on aglobal sample of industrial and developing countries, this paper digs deeper into the importance of cyclical versuspermanent components by extending the seminal contribution of Datt and Ravallion (1992). In particular, it shows thatmore than 40 percent of the fall in monetary poverty observed in Latin America and the Caribbean during theso-called Golden Decade can be attributed to cyclical changes in income. While in principle universal, theseconcerns are particularly relevant in the developing world where, compared to developed countries, output volatility islarger and driven, to a large extent, by external factors (such as commodity prices).
    Date: 2022–06–30

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