nep-lam New Economics Papers
on Central and South America
Issue of 2023‒05‒22
three papers chosen by

  1. Wars, Education and Economic Development By Jakob B. Madsen; Miethy Zaman
  2. IMF precautionary facilities and their use in Latin America By Sonsoles Gallego; Isabel Garrido; Ignacio Hernando
  3. The Effects of Differential Exposure to COVID-19 on Educational Outcomes in Guatemala By Andres Ham; Emmanuel Vazquez; Monica Yanez-Pagans

  1. By: Jakob B. Madsen; Miethy Zaman
    Abstract: In this paper, we hypothesize that the prolonged wars in Latin America during most of the 19th century hindered human capital development and delayed economic progress well into the 20th century. Collecting novel data for the seven largest Latin American economies over the period 1820-2016, we show that the extraordinarily large share of military expenditure in total spending crowded out investment in education and R&D, which in turn had persistent effects on economic development.
    Keywords: military campaigns, education, economic development, crowding out, state capacity, Latin America
    JEL: I20 N54 O11 O30
    Date: 2023–05
  2. By: Sonsoles Gallego (Banco de España); Isabel Garrido (Banco de España); Ignacio Hernando (Banco de España)
    Abstract: Between 2009 and 2010, in response to the global financial crisis, the International Monetary Fund created a number of lending tools to pre-empt and insure against crises. These pre-emptive facilities were intended for countries with sound economic fundamentals and policies, but with exposure to financial contagion risks. The use of these instruments (in terms of number of countries) was limited during the first ten years of their existence, but with the outbreak of the pandemic three Latin American countries applied to use them. An assessment of these lines suggests they have performed the insurance function for which they were conceived. In anticipation of the forthcoming review of these credit lines, and in the light of recent experience, possible reasons for the limited demand are analysed and relevant factors are suggested for the design of “exit strategies”, the aspect of their use that has attracted most attention.
    Keywords: IMF, insurance facilities, Flexible Credit Line, Short-term Liquidity Line, Latin America
    JEL: F30 F33
    Date: 2023–02
  3. By: Andres Ham (School of Government- Universidad de los Andes); Emmanuel Vazquez (CEDLAS-IIE-FCE-UNLP); Monica Yanez-Pagans (Education Global Practice. The World Bank)
    Abstract: This paper studies the effects of differential exposure to COVID-19 on educational outcomes in Guatemala. The government adopted a warning index (ranging from 0 to 10) to classify municipalities by infection rates in 2020, which was then used by the Ministry of Education in 2021 to establish a “stoplight” system for in-person instruction. Using administrative panel data for all students in Guatemala, the study employs a difference-in-differences strategy that leverages municipal differences over time in the warning index to estimate the effects of the pandemic on dropout, promotion, and school switching. The results show that municipalities with a higher warning index had significantly larger dropout, lower promotion rates, and a greater share of students switching from private to public schools. These effects were more pronounced during the first year of the pandemic. The findings show differential effects by the level of instruction, with greater losses for younger children in initial and primary education. The results are robust to specification choice, multiple hypothesis adjustments, and placebo experiments, suggesting that the pandemic has had heterogeneous consequences.
    JEL: H12 I21 I24 I25 I28
    Date: 2023–05

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