Abstracts

Parallel Sessions E1 to E5

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

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

E1: Bolivian Economy

Determinantes de la rentabilidad de los Fondos de Inversión en Bolivia

Alejandro Vargas, UPB

En el presente documento se desarrolla un análisis empírico de los factores determinantes de la rentabilidad de los Fondos de Inversión en Bolivia. A través de la estimación de un modelo de Vectores Auto Regresivos con datos de Panel y Vectores Auto Regresivos Estructurales, con datos mensuales de 36 fondos de inversión para el periodo 2012–2016, se identifican las interdependencias dinámicas entre variables económicas y el rendimiento de los Fondos de Inversión. Los resultados muestran que el incremento en la tasa de interés de depósitos a plazo fijo, la reducción en la liquidez de entidades financieras, el aumento de la actividad económica y la disminución de la inflación, tienen un efecto positivo sobre la rentabilidad de los fondos de inversión. De las variables mencionadas, la más influyente es la inflación.

Deuda pública externa de Bolivia 1970–2018: Análisis histórico y econométrico de sostenibilidad

Guillermo Gómez Aliaga, IISEC – Universidad Católica Boliviana
Germán Molina, Universidad Católica Boliviana

“En el presente trabajo se realiza una revisión conceptual, normativa, histórica y econométrica de la deuda externa de Bolivia 1970‐2018, abarcan un total de 49 años y luego se clasificó en tres períodos que se distinguen en la historia económica del país caracterizado por los hechos económicos, sociales y políticos que acontecieron: el primero, la gestión gubernamental militar de 1970‐1981; el segundo, el retorno a la democracia y de predominio de la asignación de los recursos mediante los mecanismos de mercado y el Gobierno como regulador, que cubre el período 1982‐2005; y el tercer período donde el Gobierno asume un mayor protagonismo en todas las actividades de la economía (y además logra la aprobación de una nueva Constitución Política del Estado en febrero de 2009), que abarca el período 2006‐2018.

Expectativas y desafíos de la industrialización del litio en Bolivia

Roberto Del Barco Gamarra, Universidad Técnica de Oruro
Guillermo Foladori, Universidad Autónoma de Zacatecas

Lithium has been considered white gold in the financial spheres of the last decade. Bolivia has emerged in the context of producing countries with a million dollar project for the exploitation of its brine reserves under state control. This Lithium has been considered white gold in the financial spheres of the last decade. Bolivia has emerged in the context of producing countries with a million dollar project for the exploitation of its brine reserves under state control. This article reviews the recent history of lithium’s role in Bolivia; it accentuates the current stage of State industrialization by raising doubts about the viability of State exploitation in Bolivia, suggesting that issues like the development of labor productivity by competitors, together with issues of environmental unsustainability, can destroy governmental expectations.article reviews the recent history of lithium’s role in Bolivia; it accentuates the current stage of State industrialization by raising doubts about the viability of State exploitation in Bolivia, suggesting that issues like the development of labor productivity by competitors, together with issues of environmental unsustainability, can destroy governmental expectations.

E2: Financial Economics

Análisis estructural de shock precio del petróleo en la macroeconomía de Bolivia

Juan Ruiz Otondo, Datastudy Consulting

El sistema económico – sanitario global vive un momento de incertidumbre y de crisis de confianza por el doble shock internacional; de pandemia de Covid 19 y por fuerte volatilidad de precio de crudo, en ese contexto Bolivia no es ajeno a esa realidad, por lo que es necesario indagar de como impacta el shock de precio de petróleo en las variables macroeconómicas más sensibles de la economía boliviana de 1990q1 – 2019q4. Este papers tiene como objetivo examinar el efecto del shock de precio de petróleo en la macroeconomía, mediante instrumento econométrico de Vectores Autorregresivos Estructurales (SVAR). El resultado de la evidencia empírica determina que el shock estructural de precio de petróleo WTI indexado a BRENT incide de manera decreciente en el comportamiento de las variables macroeconómicas de Producto Interno Bruto Real (PIB), Tipo de Cambio nominal, Saldo de la Cuenta Corriente, Inflación y Tasa de Interés, con variaciones estacionales, cíclicas, aleatorias a corto plazo, con señales de estabilización a 0 en mediano plazo tal como muestra los intervalos de confianza a 95% de la función impulso respuesta. Se concluye que la volatilidad del precio del crudo WTI influye de manera categórica en la actividad económica, por lo que el shock de precio del petróleo es relevante, estadísticamente significante para explicar el comportamiento real en las variables macroeconómicas del país, un aspecto determinante para tomar en cuenta en la coyuntura actual de pánico epidemológico internacional Covid 19 y el shock de petróleo, para la toma de decisiones en la política económica.

Is S&P500 a bubble? An empirical approach

Oscar Martinez, Universidad Privada Boliviana

We analyze if the dynamics of the S&P500 resemble those of a bubble. We find positive evidence in this question and our conclusion is robust to three different stochastic discount factors SDFs considered: Linear Utility, Log Utility and CRRA utility. We also find evidence of a relationship between the SDF and the size of a bubble in the S&P500 case. The lower the SDF the bigger the bubble.

Prudential regulation of loan loss provisions and the allocation of mortgage loans: Evidence from administrative data in Chile

Mauricio Calani, Central Bank of Chile
Manuel Paillacar, Central Bank of Chile

How does a borrower based macroprudential policy, namely minimum requirements of loan loss provisioning (LLP), affect the mortgage market? We examine the 2016 policy change in Chile, in which the banking supervisor raised such requirements in a non uniform basis, arguing in favor of its prudential role. We conclude that because of this regulation, the loan to value (LTV) ratio of granted loans was lowered by 2.8% and 9.8% for the mean and median borrowers, respectively. We argue that banks responded by raising their borrowing standards, i.e. lower loan to value ratios and thereby contracting their credit supply, and not off loading higher financial costs onto higher interest rates charged to borrowers. We reach this conclusion by dissecting a rich and unique administrative dataset containing the universe of real estate transactions in Chile, coupled with census information on bank mortgage loans (and their characteristics) from the credit registry. We rationalize our findings in a small model of imperfect information which guides our interpretation of the evidence.

E3: Terms of Trade

Terms of trade shocks in the Bolivian business cycle

Mario Loayza Grisi, Independent

Until 2014 Bolivia experienced a decade of sustained economic growth. This coincided with the commodity prices boom. Bolivia relies on natural gas sales and since the fall of international commodity prices, macroeconomic indicators have deteriorated. This raised questions regarding the reasons for the economic success of the country. The research conducted relies on a SVAR model and variance decomposition analysis to uncover the reasons for the high economic growth that Bolivia experienced. This investigation takes commodity prices as a proxy for Terms of trade and finds that around half of Bolivia’s output variance can be explained by movements in international commodity prices.

Terms of trade shocks, time varying volatility and intersectoral dynamics in a small open economy

Osvaldo Pericón, Queen Mary University of London

“This paper shows that shocks to the volatility of the terms of trade have a negative long run effect on output, consumption and investment in a commodity producing small open economy. I show this by solving a dynamic, stochastic general equilibrium model with two producing sectors driven by a stochastic volatility process on the terms of trade. The model can replicate the negative relationship between output and the terms of trade observed in the Chilean economy, as well as the Obstfeld Razin Svensson effects by which favorable terms of trade are associated with a deficit in the trade balance. Terms of trade shocks lead to a reallocation of resources towards the exportables sector, but volatility shocks have a negative long run effect in the aggregate economy.

The Changing Costs of Global Value Chains and Wage Inequality in Developing Countries

Rodrigo Garcia Ayala, World Bank

This paper addresses the impacts changes in the cost structure of Global Value Chains, derived from automation and offshoring, have had on wages in developing countries. The main contribution we provide is causal evidence of the impacts and counterfactual predictions based on a model that develops sufficient statistics for welfare analysis. Importantly, by relying on the methods proposed by Adao, Costinont and Donaldson (2017), and our results are free of functional form assumptions for technology and preferences, depending solely on the proper identification of the demand system for factors of production within a GVCs. Using this framework, we can account for changes in the dynamics of offshoring and automation and the impact these have on wage inequality dynamics in developing countries. Our estimates will also allow us to conduct counterfactual analysis: to consider the effect of a significant collapse in GVC sourcing from developed countries to developing ones, and a substantial increase in the levels of automation in the production process.

E4: Gender

The Effects of Violent Crime on Intrahousehold Resource Allocation and Marriage Markets

Maria Hernandez De Benito, Georgetown University

This paper examines the effects of violence on intrahousehold resource allocation and marriage markets by exploiting the unexpected and geographically heterogeneous rise in violence during the Mexican drug war since 2007. Previous work has documented asymmetric negative effects on the employment levels of men and women, and a possible regression on attitudes towards women’s place in the economy and inside the household. This paper first presents a theoretical framework to provide an intuitive explanation of why increases in violent crime may affect when and whom to marry, the distribution of power within a couple, and if and when the couple decides to separate. Empirically, I test the effect of violence on household resource allocation of resources and find a shift in expenditure towards male private assignable goods. Then, I explore whether the results are driven by a deterioration on women’s bargaining power. Second, I estimate the effects on marriage markets. The results suggest that violence decreases women’s age of marriage, increases marital age gaps, and increases divorce rates.

Intergenerational Effects of Improving Women’s Property Rights: Evidence from India

Nayana Bose, Scripps College
Shreyasee Das, Temple University

This paper analyzes the intergenerational effects following the positive changes in women’s inheritance rights in India. Using the Indian Human Development Survey data for rural India and a difference in differences strategy, we find that the property rights reform significantly increased women’s education. However, we find no evidence of an intergenerational transmission of education to her children. We explore two potential mechanisms to explain these results: the role of status conflict among spouses and that of a child’s birth order and gender. Given that a woman’s bargaining power may depend on her relative position to that of her husband, we investigate this channel and find a significant decrease in children’s education in households where fathers are less educated than mothers. Accounting for a child’s birth order and gender, we find no evidence of son preference through the education channel.

The effectiveness of documentary films to reduce violence against women

Vincent Leyaro, University of Dar es Salaam
Pablo Selaya, University of Copenhagen
Neda Trifkovic, University of Copenhagen

We conduct an experiment to investigate the effectiveness of documentary films in changing attitudes and reporting experiences of violence against women. Our results show no effect of a domestic violence video documentary on attitudes justifying violence and, surprisingly, a negative effect on reporting own experiences of violence, both at the extensive and the intensive margins. We find a similar result using a video documentary on violence against albinos as an alternative treatment, which suggests that severity and not the specific contents of these videos are driving the effect. Taken together, the results suggest that documentary films depicting severe violence could be ineffective or even exacerbate violence underreporting. Given the particular context of the study, these results also suggest that visual cues may not be a successful way of changing attitudes towards violence against women in environments where attitudes and the practice of domestic violence against women are deeply ingrained.

E5: Human Capital and International Economics

Human Capital Constraints, Spatial Dependence, and Regionalization in Bolivia: A Spatial Clustering Approach

Erick Gonzales, United Nations
Carlos Méndez, Nagoya University

Using a novel municipal level dataset and spatial clustering methods, this article studies the distribution of human capital constraints across 339 municipalities in Bolivia. In particular, the spatial distribution of five human capital constraints are evaluated: chronic malnutrition in children, non Spanish speaking population, secondary dropout rate of males, secondary dropout rates of females, and the inequality of years of education. Through the lens of both spatial dependence and regionalization frameworks, the municipalities of Bolivia are endogenously classified according to both their level of human capital constraints and their locational similarity. Results from the spatial dependence analysis indicate the location of hotspots (high value clusters), coldspots (low value clusters), and spatial outliers for each of the previously listed constraints. Results from the regionalization analysis indicate that Bolivia can be regionalized into six to seven geographical locations that face similar constraints in the accumulation of human capital. The article concludes by highlighting the usefulness of spatial data analysis for designing and monitoring human development goals.

Shocks de Precios Internacionales bajo Incertidumbre Estocástica

Samuel Alarcon Gambarte, ILADES

América Latina ha experimentado un contexto de alta volatilidad en sus términos de intercambio durante los últimos años. Para analizar este fenómeno, se aporta una nueva forma de modelar los precios externos que busca capturar la incertidumbre del mercado internacional. Se construye un modelo de equilibrio general dinámico estocástico y se estima con datos de Bolivia. Finalmente, se realiza una simulación introduciendo un shock de precios de exportación y analizando tres escenarios diferentes: Convencional, bajo shock de persistencia y bajo shock de varianza. Se analizan los mecanismos macroeconómicos de transmisión ante los shocks externos y como los agentes económicos reaccionan a cambios en la incertidumbre.

Volatilidad del tipo de cambio en México y Brasil: Un modelo Markov Switching GARCH

Benigno Caballero Claure, Universidad Técnica de Oruro
Rolando Caballero Martinez, Escuela Militar de Ingeniería, La Paz

Este documento analiza la evolución de la volatilidad cambiaria en México y Brasil en el periodo 1994–2014, y presenta evidencia de que la misma tiende a disminuir con el tiempo. Además, se analiza la relación existente entre la volatilidad cambiaria y la tasa de depreciación. Nuestros hallazgos indican que tres de cinco modelos de volatilidad condicional confirman que una mayor depreciación cambiaria precede temporalmente a una mayor volatilidad cambiaria. Asimismo, para poder analizar estos efectos se emplean modelos de heterocedasticidad condicional (ARCH M, GARCH M, TGARCH M, EGARCH M, y PARCH M), así como modelos markovianos: Switching Markov Regression. Los resultados demuestran que, una vez que la volatilidad se encuentra en un determinado régimen (alto o bajo), es muy baja la probabilidad de que pase al otro régimen de manera inmediata. Otro hallazgo importante es la persistencia alta en volatilidad en ambas economías, lo que confirmaría que los choques en ella no se disipan rápidamente.