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Macroeconomics


Understanding Domestic Saving in Latin America and the Caribbean: The Case of Mexico
Karver, Jonathan; Székely, Miguel; Mendoza, Pamela
Working Papers - English - Sep, 2015

This study addresses why Mexico continues to show below-average economic growth rates in spite of displaying systematically higher domestic savings than other countries in the region. Using the wealth of relevant databases available for the country, the paper finds that a possible explanation is that household savings account for a majority of domestic savings, and that the main instrument used for savings is durable goods, which implies that savings are not directly injected into the financial system for fueling productive investment. The construction of a synthetic panel from household survey data shows that household savings in Mexico have a clear age-increasing trend and have been growing across generations during the past 30 years; it is thus probable that rates will increase in years to come. However, if those savings continue to elude the financial system, their influence on economic growth may remain limited.

Related JEL Codes:
D14 - Personal Finance
E22 - Capital; Investment; Capacity


Explaining Changes in Tax Burdens in Latin America: Does Politics Trump Economics?
Scartascini, Carlos; Hallerberg, Mark
Working Papers - English - Sep, 2015

This paper examines whether elections, which are generally held on fixed dates, and banking crises explain the timing of tax reforms and the allocation of the additional tax burden. Using an original fine-grained dataset of tax reforms, the paper finds support for the role of these two sources of variation. In particular, the probability of reform is higher during banking crises. During electoral periods, increasing taxes becomes highly unlikely, even if the government is facing financing problems. Interestingly, politics seem to trump economics: banking crises do not affect the probability of having a reform during electoral times. Moreover, the presence of an IMF program affects the tax instruments chosen: countries with a program increase the value-added tax, while those without raise the personal income tax. Finally, the ideology of the president does not explain who bears the additional tax burden.

Related JEL Codes:
F41 - Open Economy Macroeconomics
H2 - Taxation, Subsidies, and Revenue


What is the Relationship between National Saving and Investment in Latin America and the Caribbean?
Cavallo, Eduardo A.
Working Papers - English - Sep, 2015

Using panel co-integration techniques and a comprehensive dataset covering the period 1980-2013, this paper finds a positive and significant correlation between national saving and domestic investment rates in Latin America and the Caribbean (LAC). The estimated correlation is approximately 0.39; i.e., for every 1 percentage point of GDP increase in national saving, domestic investment increases by 0.39 percentage points on average. There are however, three nuances to the headline result: i) the estimated correlation has been declining over time; ii) the regional average hides a large degree of intra-regional heterogeneity; and iii) the estimated coefficient is largest amongst the biggest economies in the region. It is concluded that low national saving rates remain a binding constraint for capital accumulation in LAC.

Related JEL Codes:
C23 - Models with Panel Data; Longitudinal Data; Spatial Time Series
E2 - Macroeconomics: Consumption, Saving, Production, Employment, and Investment
F36 - Financial Aspects of Economic Integration


Priorities for Productivity and Income (PPIs). Country Results: Peru
Izquierdo, Alejandro; Llopis, Jimena; Ruiz, Jose Juan; Muratori, Umberto
Brochures - English - Aug, 2015

This document discusses Priorities for Productivity and Income (PPIs) for Peru based on results obtained in the study “In Search of Larger per Capita Incomes: How to Prioritize across Productivity Determinants” by Izquierdo et al. (2015). The document includes a list of PPIs and their impact on the likelihood of Peru’s ability to jump to a higher income-per-capita group. It also shows how Peru compares with the average member of its own income-per-capita group and the average member of the next higher income-per-capita group across the eight sectors analyzed here: Health, Education, Infrastructure, Labor Markets, Capital Markets, Innovation, Integration and Trade, and Telecommunications.

Related JEL Codes:
O10 - Economic Development: General
O40 - Economic Growth and Aggregate Productivity: General
O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


Priorities for Productivity and Income (PPIs). Country Results: Bolivia
Izquierdo, Alejandro; Llopis, Jimena; Ruiz, Jose Juan; Muratori, Umberto
Brochures - English - Aug, 2015

This document discusses Priorities for Productivity and Income (PPIs) for Bolivia based on results obtained in the study “In Search of Larger per Capita Incomes: How to Prioritize across Productivity Determinants” by Izquierdo et al. (2015). The document includes a list of PPIs and their impact on the likelihood of Bolivia’s ability to jump to a higher income-per-capita group. It also shows how Bolivia compares with the average member of its own income-per-capita group and the average member of the next higher income-per-capita group across the eight sectors analyzed here: Health, Education, Infrastructure, Labor Markets, Capital Markets, Innovation, Integration and Trade, and Telecommunications.

Related JEL Codes:
O10 - Economic Development: General
O40 - Economic Growth and Aggregate Productivity: General
O47 - Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence


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