Inflationary Rigidities and Orthodox Stabilization Policies: Lessons from Latin America

Orthodox stabilization programs in Latin American countrieshave been notoriously unsuccessful in combating inflation, despitethe imposition of stringent cuts in government deficits. Inmost cases inflation came down only slowly and temporarily,with concomitant declines in growth and employment. The Bolivianprogam, one of the only Latin American successes, is contrastedwith those of Argentina, Brazil, Chile, and Mexico. The problemsof dealing with chronic inflation are compared with those ofhyperinflationary countries, and the influence of price andwage rigidities, expectations, and credibility is explored.The study shows that fiscal restraint is a necessary but notsufficient condition for success, and that sound managementof nominal variables (the exchange rate and money supply) arealso necessary. The critical role of credibility is linked withprice and wage rigidities in the chronic inflation countries,whereas the unsustainability of hyperinflation is seen to increasethe credibility of and thus the potential for successful stabilizationprograms.     

Mean reversion in long-horizon real exchange rates: Evidence from Latin America

This paper examines mean reversion in real effective exchange rates in six leading Latin American economies during the XXth century using a new data set. A unit-root approach is complemented by an error-correction model including key fundamentals such as terms of trade, trade openness and relative productivities. Unit-root testing shows a very slow process of reversion – if any – to a constant mean in the original series, rejecting the strict PPP hypothesis; however, mean reversion is found after allowing for trends and structural breaks with a half-life average of 1½ years for the six countries. We also found reversion to a conditional mean defined by the co-integrating relationship with an average half-life of 2½ years. Our estimates, although lower than the 3–5 year range that motivated the Rogoff’s puzzle, still indicate the presence of important obstacles to the adjustment process that need further investigation.     

中国对拉丁美洲投资的新时代

中国与拉美,一个在东半球的东边,一个在西半球的西南,隔着世界上最浩瀚的海洋。习近平主席此访拉近了相距遥远的两块大陆之间的距离,让太平洋“变窄”,铸就了南南合作的新丰碑,也让拉美的“中国温度”持续走高。 可以看到,现今,中国与拉美之间的关系正成为世界上最重要的关系之一。而近年来,中拉经贸合作水平也在持续快速攀升,贸易、投资、金融“三驾马车”同时发力,中拉经贸前景可期。     

Systemically important banks and financial stability: The case of Latin America

This paper addresses the issue on how bank size and market concentration affect performance and risks in 17 Latin American countries between 2001 and 2008. The objective is to evaluate whether a too-big-to-fail behavior has been present in the region. Surprisingly, we do not find evidence to support a higher fragility of large Latin American banks. Our results show that systemically important financial institutions appear to outperform others in terms of both cost and profit without the need of taking more risks. This result holds even in concentrated markets, i.e., where there are few dominant banks and many others with small size in relation to the market. A highly unequal banking market in terms of assets, however, is detrimental for the performance of smaller banks and it also decreases stability of the whole system. We conclude that regulators should deal with market concentration by reducing the size gap between large and small banks, instead of dealing specifically with systemically important banks.     

Latin America in the rearview mirror

Latin American countries are the only Western countries that are poor and that are not gaining ground on the U.S. This paper evaluates why Latin America has not replicated Western economic success. We find that this failure is primarily due to TFP differences. Latin America's TFP gap is not plausibly accounted for by human capital differences, but rather reflects inefficient production. We argue that competitive barriers are a promising channel for understanding low Latin TFP. We document that Latin America has many more international and domestic competitive barriers than do Western and successful East Asian countries. We also document a number of microeconomic cases in Latin America in which large reductions in competitive barriers increase Latin American productivity to Western levels.     

Public Intervention in Health Insurance Markets: Theory and Four Examples from Latin America

This article examines rationales for public intervention inhealth insurance markets from the perspective of public economics.It draws on the literature of organizational design to examinealternative public intervention strategies, including issuesof contracting, purchaser provider splits, and regulation ofcompetition. Health insurance reforms in four Latin Americancountries are then considered in light of the insights providedby the theoretical literature.      

Eleonora Masini: Nurturing visions of the future

This profile is an overview of the remarkable career of Eleonora Barbieri Masini, the mother of Futures Studies, who dedicated her professional life to nurturing hopeful visions of the future. She was a leading proponent for studying the future and a reviewer of the field. An Italian sociologist, Masini was first influenced by French thinkers, then by the advocacy of Aurelio Peccei, co-founder of the Club of Rome, with whom she became a close friend. During the change swirling around her beloved Europe, as it struggled for post-war reconstruction, she helped establish the World Futures Studies Federation, taking this global network of futurists behind the Iron Curtain and into the developing world. She was always on the move, particularly seeking out and encouraging women to take seriously their special role in both envisioning and creating the future. Her own hope for the future, which she held against the tide, helped lift her beyond a bleak present.     

Impact of Trade Credit on Firm Inventory Investment During Financial Crises: Evidence from Latin America

This paper studies whether trade credit is used as a substitute for bank credit in crisis periods in Latin America. The sample is composed of firms listed on the Argentine, Brazilian, and Mexican stock exchanges from 1994 to 2009. For the small firms, the substitution hypothesis was not rejected. However, this hypothesis was not confirmed homogeneously for all the firms during the crises. Unlike Brazilian and Argentine firms, Mexican firms use more cash reserves than trade credit. The big firms tend to use other financing sources. A pattern of trade credit use by sector has not yet been found.     

拉美城市化教训对我国的警示

目前,我国以农村向城市、农业向非农业流动为主导的城市化正步入快车道。根据国家人口发展战略研究成果,2014年我国城市化水平可能超过     

Latin America After the Argentine Crisis: Diminishing Financial Market Integration

Original Papers

Latin America After the Argentine Crisis: Diminishing Financial Market Integration     

IPSAS in Latin America: innovation,isomorphism or rhetoric?

ABSTRACT

Over the past 30 years, many initiatives have been undertaken to reform public administration in Latin American countries. Among other aspects, the reforms seek to improve the transparency and accountability of the public sector by modernizing public accounting and budgeting systems. The adoption of accrual accounting in the public sector has been seen as an innovation and it is driven by the implementation of IPSAS. This paper sheds light on the process of reform of public financial management in Latin America and the state of implementation of IPSAS. The paper analyses the driving forces for adopting or adapting IPSAS, as well as the obstacles and challenges in doing so.     

拉美金融危机:下一个会是谁?

星星还是那个星星 "幸福的家庭都是一样的,不幸的家庭各有各的不幸."这句话用在金融危机现象上似乎并不准确,因为每次金融危机,无论起因还是后果都基本类似.这次的阿根廷金融危机亦不例外.     

Consolidation in banking and the lending channel of monetary transmission: Evidence from Asia and Latin America

This paper examines the relationship between increased consolidation in banking and monetary policy transmission in eighteen Asian and Latin American economies, using bank-level data from 1996 to 2006. Our results provide consistent evidence that as concentration in banking increases, the bank lending channel is weakened, leading the monetary policy transmission mechanism to be less effective. We also investigate how this relationship between concentration and the strength of the lending channel depends on bank-specific characteristics. Using bank-level balance sheet and income statement data allows us, first, to better identify the effects of banking consolidation on the supply-side bank lending channel from those of the demand-side interest rate channel, and second, to test for any systematic differences in the impact of consolidation on monetary policy transmission across banks of different size and financial strength. We also discuss potential explanations for and policy implications of the main findings of this paper.     

Dual Exchange Rates in Europe and Latin America

This article uncovers some important empirical regularitiessurrounding the operation of formal dual exchange rates in Europeand Latin America in the 1970s and 1980s. Although there areparallels between the European and Latin American experiences,there are also interesting differences in terms of the sizeand nature of the distortion created by two official exchangerates; the response of the distortion to foreign interest rates,real commercial exchange rates, and domestic budget deficits;and the motives for adopting this exchange rate regime. Empiricalwork on dual exchange rate regimes is made difficult by thetransitory nature of these regimes and by frequent changes ininstitutional practices.     

Child Labor and School Achievement in Latin America

Child labor’s effect on academic achievement is estimatedusing unique data on third and fourth graders in nine Latin-Americancountries. Cross-country variation in truancy regulations providesan exogenous shift in the ages of children normally in thesegrades, providing exogenous variation in the opportunity costof children’s time. Least squares estimates suggest thatchild labor lowers test scores, but those estimates are biasedtoward zero. Corrected estimates are still negative and statisticallysignificant. Children working 1 standard deviation above themean have average scores that are 16 percent lower on mathematicsexaminations and 11 percent lower on language examinations,consistent with the estimates of the adverse impact of childlabor on returns to schooling.     

The international transmission of interest rate shocks: The Federal Reserve and emerging markets in Latin America and Asia

This paper analyzes the effects of changes in the U.S. Federal Reserve's Federal Funds rate on emerging countries' interest rates using high frequency (weekly) data. I also investigate how changes in the U.S. term structure affect short term rates' differentials. Other shocks include changes in the U.S. dollar–Euro exchange rate, changes in the international price of oil, risk ratings, and the degree of capital mobility. The results indicate that there is a strong and fairly rapid transmission of changes in the Federal Funds rate into interest rates in the Latin American countries in the sample. This effect is equally large in the Asian nations in the long run. The adjustment path is different across the two regions, however. Adjustment is very fast and cyclical in Latin America; it is gradual and slower in East Asia.     

Fiscal shocks and real exchange rate dynamics: Some evidence for Latin America

This paper analyses the effects of fiscal shocks in selected Latin American countries using a two-country model for output, labour input, government spending and relative prices. Dynamic simulation techniques are then applied, in particular to shed light on the possible effects of fiscal imbalances on the real exchange rate. Using quarterly data over the period 1980-2006, we find that in a majority of cases fiscal shocks are the main driving force of real exchange rate fluctuations.     

Eleonora Masini on the empowerment of women

Eleonora Barbieri Masini's lifetime contributions as visionary sociologist and pioneering futurist are well known. Less well known, perhaps, are her roles as vital catalyst in organizing comparative research on the role and status of women and as activist leader in efforts to end the exploitation and subordination of women and to create a future world of equality, freedom, and social justice. In this article, examples of Masini's work on—and for—the empowerment of women are given.