School Choice, Incentives, and Academic Outcomes: Evidence from Chile

This paper examines the effects of inter-school competition on student outcomes by using exogenous variation in the availability of private schools in Chile. Given that naïve estimates of the effects of competition on student outcomes are biased by endogenous entry of schools, this paper uses variation in the number of Catholic priests per capita in different school markets, as an exogenous determinant of the supply of private schools. Results suggest that greater competition significantly raises both test scores and the productivity of schools. There is also evidence that the effects of school choice are significantly larger for students attending subsidized private schools, and insignificant or even negative for students attending public schools facing softer budget constraintsVouchers, School choice, incentives, Chile

Financial Structure in Chile: Macroeconomic Developments and Microeconomic Effects

The objectives of this paper are, first, to describe the developments in Chilean financial markets at the macroeconomic level and, then, to examine their effects at the level of firms. After reviewing the main government policies towards financial markets in the last three decades, the paper describes the remarkable changes and progress in the banking sector and in various types of capital markets (bond, stock, pension and insurance markets) during the same period. This is done by evaluating changes in financial markets size, activity, and efficiency. Second, the paper analyzes the changes in both the access to financial markets and the financing (balance-sheet) decisions in a sample of Chilean firms. The sample consists of 79 firms that are quoted in the stock market and for which annual balance sheet data for the period 1985-1995 are available and complete. The paper estimates and tests econometrically three issues. The first is whether the firms' reliance on internal funds for investment has decreased in the more financially open period of the 1990s relative to the 1980s and, thus, whether investment has been more responsive to changes in the q-value of the firm. The second examines whether financial liberalization and the development of the banking, stock and bond markets at the aggregate level have affected the importance of debt relative to equity and the maturity of debt in the balance sheet of firms. The third studies the extent to which firm-specific and aggregate financial market developments have impacted on firm growth, measured by the percentage increase in operational revenues. In general, we conclude that financial developments at the macro level have indeed had an impact on the firms' access to capital markets, their financial structure, and their rate of growth.

Trends and Cycles in Real-Time

This paper compares the results of applying several detrending methods to the Chilean monthly economic activity index (IMACEC) that arise from using real-time data sets. We show that data revisions are extremely important and that they can lead to systematically inconsistent estimates of the trend component. Furthermore, most of the filters commonly used to detrend time series in practice, are highly unstable and unreliable for end-of-sample estimation.

Good, bad, and ugly colonial activities : studying development across the Americas

Levels of economic development vary widely within countries in the Americas. This paper argues that part of this variation has its roots in the colonial era. Colonizers engaged in different economic activities in different regions of a country, depending on local conditions. Some activities were"bad"in the sense that they depended heavily on the exploitation of labor and created extractive institutions, while"good"activities created inclusive institutions. The authors show that areas with bad colonial activities have lower gross domestic product per capita today than areas with good colonial activities. Areas with high pre-colonial population density also do worse today. In particular, the positive effect of"good"activities goes away in areas with high pre-colonial population density. The analysis attributes this to the"ugly"fact that colonizers used the pre-colonial population as an exploitable resource. The intermediating factor between history and current development appears to be institutional differences across regions and not income inequality or the current ethnic composition of the population.Population Policies,Economic Theory&Research,Demographics,,Country Population Profiles

Microeconomic Effects of Capital Controls: The Chilean Experience During the 1990s.

This paper studies the experience with the use of capital controls in Chile during the 1990s. Rather than revisiting previous studies, it complements previous research by providing, for the first time, empirical evidence on some of the microeconomic effects of capital controls, in particular, the unremunerated reserve requirement (URR). By looking at financial statements for a group of 73 Chilean firms during 1986-2001, the paper attempts to identify the effects of the URR on the firms’ costs and ways of financing. Chilean firms are grouped by economic sector, size and access to international capital markets. Results show that the effects of the URR are firm specific; forinstance, there are striking differences in the response to the URR among firms of different size and those with or without access to international capital markets.

Capital Controls in Chile: Effective? Efficient?

New empirical evidence with regards to the effectiveness and efficiency of Chile's capital controls is provided here, based on more and better data on the range of controls and a broad assessment of their costs and benefits. The paper concludes that capital controls have been partially effective by raising the wedge between domestic and foreign interest rates, reducing aggregate net capital inflows, and changing the debt composition toward longer maturities, without significantly altering the real exchange rate. Part of these effects is temporary as the effectiveness of controls is eroded over time for a given interest rates differential. Controls may have been crucial by contributing to Chile's lower exposure to short-term foreign liabilities at the time of the 1997-98 international financial turmoil. However, achieving temporary macroeconomic benefits by relying on capital controls involves incurring in financial and growth effects that raise concerns about their efficiency. The costs that resulted from the policy mix that comprised the capital controls, in terms of quasi-fiscal losses and lower investment and growth, were probably not negligible.

General Equilibrium Dynamics of External Shocks and Policy Changes in Chile

This paper develops a macroeconomic general-equilibrium model fully parameterized for the Chilean economy. The model’s basic relations are derived from intertemporal optimization by a group of rational forward-looking agents. The model also adds critical real-world features – such as short-run wage rigidities and a group of myopic agents – that generate deviations from the frictionless fullemployment equilibrium of the unconstrained neoclassical paradigm. The model is numerically simulated to illustrate the dynamics of Chile’s economy in response to the external shocks and policy shifts that led to the 1998-99 recession.

Competencia y Resultados Educativos: Teoría y Evidencia para Chile

This paper presents a theoretical model and empirical estimations to evaluate the effects of competition on school quality. Empirical estimations, using roughly 5,000 Chilean schools in the 1994-1997 period and econometric techniques robust to endogeneity, support the theoretical model and show a positive and relevant effect of competition on the results of public-subsidized schools. The effects are bigger for the fraction of public-subsidized schools that are private, because they have incentives more directly related to academic performance.