Debt Instruments and Policies in the New Millennium: New Markets and New Opportunities

Spreads on sovereign bonds are at an all-time low, at least since the current era of emerging economy bond markets began in the 1990s. This paper examines the current state of the international and domestic bond markets and asks whether the current favorable trends will constitute a durable change or a temporary fad and discusses what the IDB and other international financial institutions can do to help consolidate the positive trends and prevent new sudden stop episodes in Latin America

Fear and Market Failure: Global Imbalances and ¿Self-Insurance¿

This paper proposes an integrated framework to analyze jointly two key issues: the emergence of global imbalances and the precautionary motive for accumulating reserves. Standard models of general equilibrium would predict modest current account surpluses in the emerging markets if they face higher risk than the US itself. But, with pronounced Loss Aversion in emerging markets, their precautionary savings can generate substantial global imbalances, especially if there is an inefficient supply of global insurance. In principle, lower real interest rates will ensure that aggregate demand equals supply at a global level (though the required real interest may be negative). While a precautionary savings glut appears to be a temporary phenomenon, a process of correction triggered by a Sudden Stop in capital flows to the United States might lead to a hard landing

Measuring Quality of Life in Latin America: What Happiness Research Can (and Cannot) Contribute

This paper addresses the issues involved in taking a broader, quality of life-based approach rather than an income-based approach to assessing welfare. Te paper shows how a quality of life approach can help to evaluate the welfare effects of factors ranging from health, education, and unemployment to institutional arrangements such as inequality and opportunity. Nonetheless, directly inferring policy implications is problematic because norms and expectations influence the way in which individuals respond to surveys and the definition of happiness is unclear. The latter allows for research comparisons across individuals and cultures but presents challenges as a basis for policymaking

How Do Crises Affect Schooling Decisions?: Evidence from Changing Labor Market Opportunities and a Policy Experiment

This paper examines the effect of labor market opportunities on schooling and employment decisions in 12 urban areas in Argentina over 12 years, emphasizing the recession/crisis years of 1998-2002. In typical years deteriorating job rates boost the probability of attending school and decrease the probability of combining work and school, particularly for boys; the probability of being in school for secondary school children was about 6% higher in 2002 than in 1998. These estimates reflect a new 1996 Federal Education Law (FEL) that extended mandatory education to 10 years

Education and Democratic Preferences

This paper examines the causal link between education and democracy. Motivated by a model whereby educated individuals are in a better position to assess the effects of public policies and hence favor democracy where their opinions matter, the empirical analysis uses World Values Surveys to study the link between education and democratic attitudes. Controlling for a variety of characteristics, the paper finds that higher education levels tend to result in rodemocracy views. These results hold across countries with different levels of democracy, thus rejecting the hypothesis that indoctrination through education is an effective tool in non-democratic countries

Political Institutions, Policymaking, and Economic Policy in Latin America

This paper surveys selected themes in the political economy of policymaking in Latin America, with an emphasis on recent research focusing on actual decision and implementation processes, and on the political institutions and state and social actors involved in those processes. In particular, the paper addresses how political rules work for or against intertemporal cooperation among political actors. The document shows that the extent to which polities obtain the key policy features that seem to determine development depends on the workings of political institutions, which define how the policymaking game is played, on the characteristics of the arenas of interaction, which define where the policymaking game is played, and on certain characteristics of key socioeconomic groups, which define who interacts with professional politicians in pursuing different policy preferences

Becoming an Entrepreneur

Using the 1996-2001 Chilean CASEN Panel Survey, this paper analyzes the impact on income of the switch from salaried employment to entrepreneurship (self-employment and leadership of micro-enterprises). By means of a difference-in-differences non-parametric matching estimator the paper alleviates problems of selection bias (on observable and unobservable traits) and creates the appropriate counterfactuals of interest. The results indicate that the income gains associated with the switch from salaried employment to entrepreneurship are positive, statistically significant and financially substantial. Even more, the results are qualitatively the same using mean and medians, suggesting that the impacts are not influenced by the presence of few superstar winners. Additionally, the income changes associated with the reverse switches (from self-employment to salaried jobs) are negative. The results also suggest interesting gender differences, as females show higher gains than males on the switch from salaried jobs to entrepreneurship and lower losses on the reverse switch

Managing Banking Crises in Latin America: The Do's and Don'ts of Successful Bank Restructuring Programs

This paper focuses on the design of successful bank restructuring programs in Latin America, a region where banking crises have been frequent in the past two decades. In each episode, Latin American policymakers have had to act under the severe constraints imposed on developing countries, which become particularly binding during periods of financial problems. Nevertheless, a review of these experiences demonstrates that a well-conceived bank restructuring program can succeed under even the most adverse conditions. Paper prepared for the Inter-American Development Bank/Group of 30 conferences on Banking Crises in Latin America, October 6 and 7, 1995

Remesas hacia America Latina y el Caribe: Metas y Recomendaciones

Es necesario aunar los esfuerzos de todos los actores - familias transnacionales, compañías remesadoras e instituciones financieras, organismos públicos, sociedad civil y organizaciones internacionales ¿ para liberar todo el potencial que las remesas encierran para el desarrollo

I Seminario Internacional: ¿De la Cooperación Empresarial a los Sistemas Productivos?

Presenta información sobre FOMIN, los instrumentos de financiamiento, las estrategias de las cuatro áreas básicas, áreas de acción para la agrupación de proyectos de cluster. Asimismo, señala los proyectos aprobados en los últimos años y los que se encuentran en cartera