Abstracts

Parallel Sessions C1 to C5

Full abstracts for the five contributed sessions of block C. Each session lists three papers with authors and affiliations.

Zoom links were available only on the conference day. Back to the full program.

Block A Block B Block C Block D Block E Block F Full program

C1: Spatial Economics

Commodity Shocks, Factor Intensity and Conflicts in Africa

Marcelo Gantier Mita, IISEC – Universidad Católica Boliviana

Natural resources are often related to conflicts. The Dal Bó & Dal Bó (2011) theory states that income shocks affect capital and labour intensive sectors differently. Using subnational cells covering the African continent for the period 1997–2010, I find that conflicts react differently to positive commodity price shocks depending on their factor intensity. The results show that a positive shock in the capital intensive mining sector increases conflict likelihood, whereas a positive shock in the labour intensive agricultural sector reduces it. These impacts are higher for sub Saharan Africa. When testing heterogeneous effects for the degree of commodity appropriability, historical African specific factors and quality of institutions, I find that easily taxed crops behave differently to an increase in international crop prices. In the same vein, I find that neither historical African specific factors nor the quality of institutions induce differential responses in conflicts to commodity price shocks.

Gentrifying Neighborhoods, Retail Prices and Varieties

Fernando Borraz, Banco Central del Uruguay and Universidad de la República
Felipe Carozzi, LSE
Nicolás González Pampillón, LSE and Institut d’Economia de Barcelona
Leandro Zipitría, Universidad de la República

We study the effect of a demand shock due to neighbourhood change in local housing markets on retail prices and varieties. In our empirical strategy, we use an exogenous shock to the availability of new build properties induced by a major housing policy in the city of Montevideo. This policy provided a substantial tax exemption for the construction of newly built dwellings and modified the spatial distribution of construction activity in the city. We provide differences in differences estimates showing that grocery stores and supermarkets in areas where the new units were built experienced a relative decrease in the price of retail goods and an increase in the varieties offered. This change is mainly driven by an increase in competition in the area.

Regional Convergence, Spatial Scale, and Spatial Dependence: Evidence from Homicides and Personal Injuries in Colombia 2010–2018

Carlos Méndez, Nagoya University
Felipe Santos Marquez, Nagoya University

This paper studies regional convergence and spatial dependence of homicides and personal injuries in Colombia. In particular, through the lens of both classical and distributional convergence frameworks, two spatial scales are contrasted: municipalities and states. For both homicides and personal injuries, sigma convergence is only found at the state level. In contrast, beta convergence is found at both state and municipal levels. The non parametric convergence framework highlights further contrasting patterns. For homicides at the state level, four convergence clusters are found, while two clusters are present at the municipal level. For personal injuries, at both spatial scales, two clusters are found. Moreover, significant and robust spatial autocorrelation is found only at the municipal level. Overall, these results re emphasize the role of spatial disaggregation as well as spatial dependence when evaluating regional convergence and designing regional development policies.

C2: Monetary Economics

Exchange rate policy in a dollarized economy: Implications on growth and employment in Bolivia

Martin Cicowiez, CEDLAS, Universidad Nacional de la Plata
Alejandra Goytia, INESAD
Alejandro Herrera, IDB
Carlos Gustavo Machicado, INESAD
Beatriz Muriel, INESAD

We analyzed the impact of currency devaluation on the Bolivian economy, employing a dynamic and extended version of the PEP 1–1 standard model to simulate effects impact on both the main macroeconomic aggregates and the financial stocks and flows of economic agents. We built a new Financial Social Accounting Matrix for the year 2014 and calibrated the model to it. Besides simulating a devaluation of the nominal exchange rate, we also analyzed a policy response scenario, an external shock scenario, and a gradual devaluation scenario. In the policy response scenario, devaluation was accompanied by a reduction in government expenses (fiscal adjustment); in the external shock scenario, devaluation came with an increase in the export price of gas (main export commodity); and, in the gradual devaluation scenario, the exchange rate policy relaxed gradually. The external shock scenario dominated the other scenarios in terms of higher average growth and less average unemployment. The fiscal adjustment scenario, however, dominated in terms of inflation, though it implied an inflationary shock in 2020.

Los determinantes del desalineamiento del tipo de cambio real en Bolivia 2006–2014

Marco Gavincha, Universidad Autónoma Metropolitana, México

El Tipo de cambio real (TCR) en Bolivia se apreció 40.2% entre 2006–2014, lo cual podría implicar desalineamientos del TCR. La literatura identifica a los términos de intercambio como una de las variables explicativas del TCR y su desalineamiento. Sin embargo, existe un vacío sobre el rol de la productividad relativa sobre TCR de Bolivia y su desalineamiento. Por consiguiente, el propósito de investigación es calcular el desalineamiento del TCR en Bolivia para el periodo 2006–2014. Mediante un modelo VEC, se encontró una relación de largo plazo entre el TCR, el gasto gubernamental, flujo de capitales, productividad relativa y apertura comercial. Resultando un desalineamiento conocido como subvaluación, el cual tiene una magnitud de 2.1% entre 2006 y 2012 y una sobrevaluación de 0.6% entre 2013 y 2014. Estas magnitudes representan leves niveles de desalineamiento y significan que la apreciación analizada en Bolivia es un fenómeno de equilibrio.

Understanding Persistent ZLB: Theory and Assessment

Pablo Cuba Borda, Federal Reserve Board
Sanjay R. Singh, UC Davis

Concerns of prolonged near zero interest rates and below target inflation have become widespread in the advanced world. We build an analytical framework that incorporates two hypotheses of persistent ZLB episodes: expectations driven liquidity traps and secular stagnation driven liquidity traps. We estimate the DSGE model with Japanese data from 1998:Q1 to 2012:Q4. Using Bayesian prediction pools, we find that a policymaker faces considerable real time uncertainty in identifying the dominant narrative. We propose robust policies that eliminate expectations driven traps and are expansionary under secular stagnation.

C3: Microfinance and Employment

Effects of interest rate caps in microcredit: Evidence from a natural experiment in Bolivia

Alejandra Villegas, Universidad Iberoamericana Ciudad de México
Ignacio Garrón, Bolivian Central Bank
María José Roa, Instituto de Investigaciones Económicas y Sociales Francisco de Vitoria

This paper evaluates the imposition of caps on microcredit lending rates through directed credit policies for productive sectors. This financial inclusion intervention provides a unique quasi experiment, and we estimate their causal effect following a difference in differences analysis. Our results suggest that the imposition of interest rate ceilings negatively affected the portfolio balance of new microcredits and loans to SMEs granted by MFIs. Specially, we find robust results that the balance of the microcredit and SMEs’ loan portfolio granted by MFIs, relative to the company´s portfolio granted by banks, decreased by 26.1% for an average MFI for the period 2011–2018.

Opportunities and Entrepreneurship: Evidence on Advanced Labor Market Experience

Matthew Pecenco, UC Berkeley
Carlos Schmidt Padilla, UC Berkeley
Hamilton Taveras, Ministry of Finance, Dominican Republic

This paper provides the first experimental estimates of the effects of managerial labor market experience on career outcomes and subsequent measures of business creation. Exploiting randomized lotteries for government contracts to manage construction projects in the Dominican Republic, we show that after five years, individuals who win contracts are (i) 7.8 percentage points more likely to be owners of formal firms and (ii) less likely to be private sector employees. Also, the firms created by lottery winners are more likely to hire and survive than those of non winners. We use a selection model to recover the distribution of heterogeneity that drives selection into and returns from contractual experience. We find that workers select in based on potential gains and that the young drive firm creation. Since individuals with higher marginal benefits are willing to incur higher costs to participate, reducing the number of contracts allocated in the same event, or increasing application costs, would screen out applicants who may benefit from the program the least.

Evaluación de Impacto del Programa Mi Primer Empleo en el Ecuador

Cristhina Llerena Pinto, ECONOMIA CIC
Andrea Llerena, ECONOMIA CIC
Paul Llerena, ECONOMIA CIC

An analysis of the redistributive effect of fiscal policy on poverty reduction and income distribution in Ecuador using household survey data is described. Due to the detail and depth of the database, it is possible to single out the effects of direct transfers and taxes, indirect taxes and subsidies, and the use of public education and health services. Standard incidence analysis shows that direct taxes are progressive. Nonetheless, they have a negligible effect on both income distribution and poverty. Indirect taxes are progressive as well, due to several exemptions from the value added tax. Social spending on direct transfers, education, and health is progressive in absolute terms, except for secondary education, wherein it is neutral. Ecuador ranks first in inequality reduction effectiveness and second in poverty reduction effectiveness when compared to six other Latin American countries. However, it ranks only fourth in overall inequality and poverty reduction.

C4: Rural Economics and Migration

Contribución de la Agricultura Familiar Campesina Indígena en Bolivia

Carola Tito Velarde, IISEC – Universidad Católica Boliviana
Fernanda Wanderley, IISEC – Universidad Católica Boliviana

La Agricultura Familiar es un pilar clave para la seguridad alimentaria de Bolivia. La primera tarea para la visibilizar la contribución de este sector, y apoyar dicha hipótesis con evidencia, es contar con un sistema de clasificación de las unidades de producción agropecuaria en Agricultura Familiar y No Familiar. A pesar de existir un consenso en criterios que caracterizan a una unidad productiva en Agricultura Familiar se encontró que el problema radica en definición de umbrales que sirvan de guías de agrupación. El estudio propone una metodología orientada a tres principales objetivos: i) clasificar las unidades de producción agropecuaria en Familiar y No Familiar, ii) estimar el aporte de la Agricultura Familiar y No Familiar por el lado de la oferta (producción), y iii) evaluar la contribución de la Agricultura Familiar y no Familiar a la canasta básica de consumo de productos frescos seleccionados. Consideramos que los resultados son consistentes con la literatura revisada. Asimismo, esperamos que el estudio contribuya a la planificación agrícola territorial y diferenciada de acuerdo a las necesidades y oportunidades de cada sector productivo.

Do Intergovernmental Transfers Stimulate Local Economic Development?

Abigail Peralta, Louisiana State University

Many developing countries rely on a system of intergovernmental transfers to offset inequalities in spending responsibilities and powers of taxation across regions and at different levels of government. I examine the effect of intergovernmental transfers on local budgets and economic development. My approach exploits the revenue allotment formulas used for municipalities and cities in the Philippines based on a 1991 decentralization reform that resulted in cities getting annual transfers twice as large as municipalities. Unlike previous transfers studied in the literature, this increase in transfers is both large and persistent. I compare outcomes over time in pre existing cities to municipalities that became cities after the 1991 reform. I show that transfers permanently increase in the newly classified cities following cityhood, and that both locally generated revenues and spending increase. Because new cities declare a moratorium on tax rate increases, increased revenues must come from an increase in collection effort and/or higher economic activity. I also find evidence of increased economic activity – new cities exhibit an increased nighttime light intensity of about 10 percent, manifesting after two years of receiving higher transfers. My estimates are robust to controlling for regional shocks and town specific time trends, and to controlling for population changes over time. These findings provide evidence against tax and spending crowd out, and suggest that larger transfers to developing areas may instead generate greater activity through an increase in capacity.

Tracing the Institutional Footprint of Immigration on the Chessboard of Long Term Economic Development

Marie Amanda Guimbeau, Brandeis University

This paper exploits a unique experiment during the Age of Mass Migration in Brazil to estimate the institutional legacies of immigration on long term development. I assemble a novel dataset, combining historical and modern administrative data, to estimate the long term effects of immigrants’ settlements, and to evaluate the mechanisms through which these differences are sustained over time. I obtain evidence that municipalities closer to a settlement have enhanced provision of public goods today; more well defined property rights (as evidenced by structured contractual arrangements, less land invasion, and investment in high stakes agricultural practices). Using data from intervening years, I find that the presence of these settlements led to deviations in fiscal patterns, and that these early changes in locally financed public institutions have important bearings on modern institutional proxies. I show that since immigrants represented an important stratum of educated citizens, their presence turned out to be an important predictor of administrative integration. I rule out empirically the land concentration and selective internal migration channels, while also unveiling two more subtle channels in the short run: technology diffusion in agriculture, and higher intensity of Protestant activities at a time when the Catholic church dominated the religious market in Brazil.

C5: Education

Can the school entrance age explain lower academic performance? Evidence from Peru

Carmen Armas, Pontificia Universidad Católica del Perú
Antonio Campos, Universidad de San Andrés
Jesús Gutiérrez, Universidad del Pacífico

The aim of this study is to analyze the short term effects of the school entrance age on student outcomes. Using Peruvian administrative data, we exploit an exogenous rule of entry age into the school defined by the Ministry of Education since 2012. Results show that students who enrolled the school when they were exactly or almost exactly 6 years old scored worse than older students in mathematics (0.47 standard deviations) and reading (0.33 standard deviations) in standardized test scores. Moreover, we compare them with non standardized test scores and we find they are similar in reading but smaller in mathematics. Also, the probability of grade approval is 5.81 percentage points less in younger students. Similar to the literature, we also find that the negative effect is bigger when parents have poor educational attainment. However, there are not significantly different effects by sex or poverty condition of the student. Finally, while literature shows that exist negative effects of beginning school younger, our results suggest that these are considerably larger in developing countries. It would help to resolve the actual debate about what is the best age to start school in Peru.

Determinants of School Attendance rate for Bolivia: A spatial econometric approach

Mauro Delboy, UPB

The aim of this paper is to examine the impact of the spatial component on Bolivian school enrollment rate and to identify its main determinants. The contribution of this research is to stablish and identify the key relationships between the school attendance rate and spatial lagged explanatory variables. Also it is important to make an exploratory analysis of spatial data to the Bolivian municipalities and identify spatial interaction using municipal aggregated level data basis built through Bolivian Census in 2012. The rate percentage of school attendance between 6–19 years old are considered as a unit of analysis. Cross sectional and geo coded data, as well as shape files and GIS files of Bolivian municipalities are used for this analysis. The paper safely concludes that there is an existent relationship between school attendance and the spatial component. Hence, the spatial component affects directly to school attendance rate in Bolivia and the relationship between the dependent variable and household welfare variables is positive and it is negative with the rural percentage of population and poverty variables.

International Child Sponsorship Impact on the Intended Choice of Schooling: The Case of Rural Mexico

Daniel Prudencio, Rice University

This paper studies the impact of a child sponsorship program on the aspiration to acquire a higher education degree, among a sample of rural children in the states of Oaxaca and Chiapas in the south of Mexico. To account for the program’s selection of the children, we estimate a binary Roy type model with unobservables generated by a one factor structure. We use both scripted survey questions to elicit the subjective expected returns to schooling, and estimates from prior research on causality methods accounting for the endogeneity of treatment, to estimate the sponsorship effect on the revealed intended opportunity of acquiring a technical degree or university studies. We find that the average treatment effects on the treated are positive and consistent with previous studies of the sponsorship program, although they are not statistically significant. Estimates of the marginal treatment effect show that the sponsorship effect is higher for the children most likely to be selected for the program. From the subjective expectations data, I document that children in rural settings, 12 to 15 years old, have realistic although heterogeneous expectations, and we find a clear gender gap in earnings expectations, even at these young ages.