Co-autores: Alessandro Rebucci (The Johns Hopkins Carey Business School) y Martín Uribe (Department of Economics - Columbia University)

Abstract:
A growing recent theoretical literature advocates the use of prudential capital control policy, that is, the tightening of restrictions on cross-border capital flows during booms and the relaxation thereof during recessions. We examine the behavior of capital controls in a large number of countries over the period 1995-2011. We find that capital controls are remarkably acyclical. Boom-bust episodes in output, the current account, or the real exchange rate are associated with virtually no movements in capital controls. These results are robust to decomposing boom-bust episodes along a number of dimensions, including the level of development, the level of external indebtedness, or the exchange-rate regime. We also document a near complete acyclicality of capital controls during the Great Contraction of 2007-2009.

Co-autor: Deon Filmer (World Bank)

Abstract:
We evaluate a primary school scholarship program in Cambodia with two different targeting mechanisms, one based on poverty level and the other on baseline test scores (“merit”). Both targeting mechanisms increased enrollment and attendance. However, only the merit-based targeting induced positive effects on test scores. We show that the asymmetry of response is unlikely to have been driven by differences between recipients’ characteristics. Higher student and family effort among beneficiaries of the merit-based scholarships suggest that the framing of the scholarship mattered for impact. The results suggest that in order to balance equity and efficiency a two-step targeting approach might be preferable: first, target low-income individuals, and then, among them, target based on merit.

Abstract

Models with information frictions display output and inflation dynamics that are consistent with the empirical evidence. However, an assumption in the existing literature is that pricing managers do not interact with production managers within firms. If this assumption were relaxed, nominal shocks would not have real effects on the economy. In this paper, I present a model with perfect communication within firms in which nominal shocks have real effects. In this model, intermediate goods firms accumulate output inventories, observe aggregate variables with one period lag, and observe their nominal input prices and demand at all times. Firms face idiosyncratic shocks and cannot perfectly infer the state of nature. After a contractionary nominal shock, nominal input prices go down, and firms accumulate inventories because they perceive some positive probability that the nominal price decline is due to a good productivity shock. This prevents firms' prices from decreasing and makes current profits, households' income, and aggregate demand go down. According to my model simulations, a 1% decrease in the money growth rate causes output to decline 0.17% in the first quarter and 0.38% in the second followed by a slow recovery to the steady state. Contractionary nominal shocks also have significant effects on total investment, which remains 1% below the steady state for the first 6 quarters. I show that if firms make investment decisions and if their nominal input prices and demand do not perfectly reveal the state of nature, the economy exhibits money non-neutrality even under flexible prices and perfect communication within firms.

Coautores: Glenn W. Harrison (Department of Risk Management & Insurance and Center for the Economic Analysis of Risk, Robinson College of Business, Georgia State University) y J. Todd Swarthout (Department of Economics, Andrew Young School of Policy Studies, Georgia State University)

Coautor: Matthieu Delpierre (Université Catholique de Louvain)

Abstract:

Moral hazard and adverse selection impede the development of formal crop insurance markets, particularly in developing countries. While informal risk-sharing arrangements offer an alternative to formal insurance markets, the risk mitigation they provide is restricted by limited commitment, moral hazard and their inability to protect against covariate shocks. In this context, index-based insurance is seen as a promising scheme. By construction, it is immune to moral hazard and adverse selection and, if well-designed, offers effective protection against covariate shocks. At first glance, it would thus seem that the two institutions are ideal complements; by offering protection against covariate shocks, index insurance should strengthen the capacity of informal risk sharing arrangements to protect against idiosyncratic shocks. Unfortunately, this intuition ignores the potential effects on incentives and behavior generated by the interaction between the two insurance schemes. This paper theoretically explores this interaction in a model with moral hazard and shows that the formal contract may crowd out informal risk-sharing if it is offered to individuals rather than groups. More precisely, we find that the rate of informal risk-sharing is reduced as soon as individual demand for index-insurance becomes interior. Second, we find that both risk-taking and welfare may be reduced by the introduction of index insurance if the premium is set too high. This adverse effect is due to the worsening of moral hazard in risk taking caused by the introduction of formal insurance. If the formal insurance is offered to the group instead of the individual, the impact on moral hazard is internalized by the group and welfare increases. This result provides an argument for exploring the feasibility of introducing group-based index insurance contracts.

Coautora: Tatiana Velasco Rodríguez (CEDE – Universidad de Los Andes)

Abstract:

Esta investigación determina el efecto del crédito para educación superior ACCES en Colombia sobre indicadores de acceso a educación superior, desempeño académico y laboral de sus beneficiarios. Utilizando la metodología de regresión discontinua y análisis de mediación se encuentra que los beneficiarios de este crédito tienen menor deserción, mejor desempeño universitario medido por materias aprobadas y probabilidad de graduación. Una vez en el mercado laboral tienen mayor probabilidad de vincularse a un empleo formal, exhiben tiempo de búsqueda más largos así como también mejores salarios. La investigación utiliza datos para más de 400 mil aspirantes al crédito con información desde su ingreso a la educación superior hasta su inserción en el mercado laboral como profesionales.

Coautor: Juan Carlos Córdoba (Iowa State University)

Este documento presenta la contribución económica de la población extranjera en Colombia desde mediados del siglo XIX. La contribución realizada por los extranjeros se presenta desde dos perspectivas: histórica y cuantitativa. Desde el punto de vista histórico se presentan las principales contribuciones de los extranjeros según región. La cuantificación de la contribución de los extranjeros en Colombia se realiza bajo una perspectiva agregada donde se utiliza la función de demanda y oferta de trabajo, y los efectos de las externalidades positivas que los extranjeros generan en la economía. Además, se contempla un modelo de series de tiempo (VEC) para cuantificar el impacto de largo plazo de la contribución de los extranjeros en la economía. Los principales resultados del estudio son una contribución importante de los extranjeros en el desarrollo del transporte, agricultura, comercio, industria, arquitectura, educación y minería. Se calcula que la contribución de los extranjeros se encuentra entre el 0,04% y 1,0% del PIB Colombiano durante 1925 y 2012; en términos per-cápita de los extranjeros pasaron de una contribución de Col$2,4 millones de 2012 en 1925 a Col$9,4 millones en 2012. Además, la contribución es permanente y se calcula en un aporte al crecimiento económico de Colombia del 0,66% del PIB. Finalmente, conflictos internacionales como la WWII e internos como el conflicto político armado colombiano han generado emigración transitoria de extranjeros, lo que implica una perdida en el crecimiento del PIB colombiano del 1,0%.

Coautor: Juan Esteban Saavedra, Economista investigador del Centro de Investigación Económica y Social Dornsife, Universidad de California del Sur.

Abstract:

Estudios recientes demuestran que el ahorro de niños y jóvenes puede tener impactos positivos importantes en el corto y mediano plazo en diversas dimensiones. Sin embargo, poco se sabe acerca de cuáles son los mecanismos más eficientes para fomentar hábitos de ahorro en la población joven y especialmente en aquella vulnerable. A través de un experimento aleatorio controlado este trabajo pretende responder si recordatorios o mensajes de educación financiera enviados a través de los celulares pueden o no convertirse en instrumentos que ayuden a fomentar el ahorro juvenil. La información disponible permite analizar el impacto directo en ahorro neto, depósitos y retiros durante un periodo de cera de un año. Además, nos permite responder a preguntas como el impacto diferencial que tiene: i) distintos tipos de mensajes; ii) distinta intensidad de los mensajes y iii) el impacto de largo plazo de los mensajes una vez dejan de ser recibidos.

Coautor: Michael R. Carter (Agricultural and Resource Economics, University of California, Davis).

Abstract:

Violence has severe material and psychological consequences. In this article we explore if it also induces pessimistic prospects of upward mobility and hopelessness. For this purpose, we bring together novel data from a sample of individuals residing in violent-torn regions in Colombia, including some who were directly victimized and displaced during last ten years. We find that victims exhibit lower prospects of upward mobility and higher levels of hopelessness. Interestingly, a considerable portion of such pessimistic behavior is explained by the severity of the victimization episodes and the incidence of depression. These results suggest that violence, as well as other negative shocks, can shatter hopes and aspirations thus hindering the ability of victims to move out of poverty

Abstract:

This research project documents the long-term economic impact of the Guarani Jesuit Missions in South America. It does so by combining data from historical Archives and municipal level Census data from Argentina, Brazil and Paraguay. Missions resulted in higher levels of income and educational attainment today. Results are robust to the inclusion of geographic controls and the usage of instrumental variables to proxy for missionary distance. Using intermediate historical censuses, human capital appears consistently higher closer to missionary districts. This persistence of educational transmission is consistent with cultural explanations, such as native assimilation and the persistence of occupational activities. Additional tests suggest that migration and tourism are not driving the results, and that the impact is specific to missions from the Jesuit (as opposed to the Franciscan) order.

Coautores: Marcela Meléndez (Econestudio) y Alessandro Maffioli (BID)

Coautor: Kebin Ma, University of Tilburg

Coautor: Axel Löffler (Deutsche Bundesbank)

Coautor: Duanjie Chen, Universidad de Calgary

Coautores: Yadira Díaz, Universidad de Essex y Juan Guillermo Bedoya, Fedesarrollo

Coautor: Ana María Iregui, Banco de la República