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on Central and South America |
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Issue of 2016‒12‒18
six papers chosen by |
| By: | Stephen McKnight (El Colegio de Mexico); Alexander Mihailov (University of Reading); Antonio Pompa Rangel (Banco de México) |
| Abstract: | This paper uses Bayesian estimation techniques to uncover the central bank preferences of the big five Latin American inflation targeting countries: Brazil, Chile, Colombia, Mexico, and Peru. The target weights of each central bank.s loss function are estimated using a medium-scale small open economy New Keynesian model with incomplete international asset markets and imperfect exchange-rate pass-through. Our results suggest that all central banks in the region place a high priority on stabilizing in.ation and interest rate smoothing. While stabilizing the real exchange rate is a concern for all countries except Brazil, only Mexico is found to assign considerable weight to reducing real exchange rate .uctuations. Overall, Brazil, Colombia, and Peru show evidence of implementing a strict inflation targeting policy, whereas Chile and Mexico follow a more flexible policy by placing a sizeable weight to output gap stabilization. Finally, the posterior distributions for the central bank preference parameters are found to be strikingly di¤erent under complete asset markets. This highlights the sensitivity of Bayesian estimation, particularly when uncovering central bank preferences, to alternative international asset market structures. |
| Keywords: | Bayesian estimation, central bank preferences, inflation targeting, Latin Amer- ica, small open economies, incomplete asset markets, monetary policy |
| JEL: | C51 E52 F41 |
| Date: | 2016–11 |
| URL: | https://d.repec.org/n?u=RePEc:emx:ceedoc:2016-08&r=lam |
| By: | Marcelo Bergolo (IECON-UDELAR, CEDLAS-FCE-UNLP and IZA); Guillermo Cruces (CEDLAS-FCE-UNLP, CONICET and IZA) |
| Abstract: | The disincentive effects of social assistance programs on registered (or formal) employment are a first order policy concern in developing and middle income countries. Means tests determine eligibility with respect to some income threshold, and governments can only verify earnings from registered employment. The loss of benefit at some level of formal earnings is an implicit tax – a notch – that results in a strong disincentive for formal employment, and there is extensive evidence on its effects. We study an income-tested program in Uruguay and extend this literature by developing an anatomy of the behavioral responses to this program and by establishing its welfare implications in full. Our identification strategy is based on a sharp discontinuity in the program’s eligibility rule. We rely on information on the universe of applicants to the program for the period 2004-2012 (about 400,000 individuals) from the program’s records, from administrative data on registered employment from the social security administration, and from a complementary follow-up survey with information on informal work. We construct the anatomy of the program’s effects along four dimensions. First, we establish that, as predicted by the theory, beneficiaries respond to the program’s incentives by reducing their levels of registered employment by about 8 percentage points. Second, we find substantial heterogeneity in these effects: the program induces a larger reduction of formal employment for individuals with a medium probability to be a registered employee, suggesting some form of segmentation – those with a low propensity to work formally do not respond to the financial incentives of the program, probably because they have limited opportunities in the labor market to begin with. Third, the follow-up survey allows us to establish that the fall in registered employment is due to a larger extent (about two thirds) to an increase in unregistered employment, and to a lesser extent (about one third) to a shift towards non-employment. Fourth, we find an elasticity of participation in registered employment of about 1.7. These results imply a deadweight loss from the behavioral responses to the program of about 3.2% of total registered labor income. |
| JEL: | H31 I38 J22 O17 |
| Date: | 2016–11 |
| URL: | https://d.repec.org/n?u=RePEc:dls:wpaper:0204&r=lam |
| By: | Verónica Amarante; Martín Brun |
| Abstract: | In this paper, we present comparative evidence for eight Latin American countries regarding design and effects of cash transfers (CTs). On the basis of household survey data, we analyse their coverage, importance in household income, and effects on poverty reduction and income redistribution. We also present a static microsimulation to analyse the potential impacts of alternative programme designs including perfect targeting and higher budgets. Our results illustrate the wide variation of these interventions in terms of their design, coverage, and importance in household income. CTs account for a significant portion of household income in lower deciles. In spite of this, their effects in terms of reductions in the incidence, intensity, and severity of poverty are, in the best of cases, moderate and, although their progressivity is high, their redistributive impact is limited. These results are mainly explained by the meager resources involved. Even under perfect targeting, the budgets allocated to transfer programs in these countries would be insufficient to achieve full coverage in the lowest part of the income distribution. |
| Keywords: | cash transfers, children, inequality, Latin America, poverty |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp2016-136&r=lam |
| By: | Pedro H. Leivas; Anderson M.A. dos Santos |
| Abstract: | In this paper, we analyse the patterns and trends of group-based inequalities in Brazil in the past 30 years. Using data from the last four demographic censuses (1980, 1991, 2000, and 2010), we estimate numerous measures to analyse inequalities between different ‘ethnic’ groups. Our results show that the trend toward greater equality in Brazil shown in other analyses of vertical inequality is also found in terms of horizontal inequalities along racial, gender, and regional lines between 1980 and 2010. Nevertheless, horizontal inequalities in terms of race and gender in particular remain pronounced; as shown using various measures, race is highly correlated with income and education. We show that municipalities with low ethnic diversity and low income and education inequality tend to be located in the South region. In regression analysis, we note that ethnic diversity negatively affects the institutional quality of Brazilian municipalities. |
| Keywords: | Brazil, group-based inequality, ethnic diversity, institutional quality, spatial econometrics, vertical inequality |
| URL: | https://d.repec.org/n?u=RePEc:unu:wpaper:wp2016-127&r=lam |
| By: | Gino Sturla; Simon Accorsi; Ramon Lopez; Eugenio Figueroa |
| Date: | 2016–12 |
| URL: | https://d.repec.org/n?u=RePEc:udc:wpaper:wp435&r=lam |
| 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. |
| URL: | https://d.repec.org/n?u=RePEc:tul:ceqwps:25&r=lam |