The social discount rate : estimates for nine Latin American countries

The social discount rate measures the rate at which a society would be willing to trade present for future consumption. As such it is one of the most critical inputs needed for cost-benefit analysis. This paper presents estimates of the social discount rates for nine Latin American countries. It is argued that if the recent track record in terms of growth in the region is indicative of future performance, estimates of the social discount rate would be in the 3-4 percent range. However, to the extent that the region improves on its past performance, the social discount rate to be used in the evaluation of projects would increase to the 5-7 percent range. The paper also argues that if the social planner gives a similar chance to the low and high growth scenario, the discount rate should be dependent on the horizon of the project, declining from 4.4 percent for a 25-year horizon to less than 4 percent for a 100-year horizon.Debt Markets,Economic Theory&Research,Inequality,Achieving Shared Growth,

Pro-growth, pro-poor : is there a tradeoff?

Is a pro-growth strategy always the best pro-poor strategy? To address this issue, the author provides an empirical evaluation of the impact of a series of pro-growth policies on inequality and headcount poverty. He relies on a large macroeconomic data set and estimate dynamic panel models that allows him to differentiate between the short- and long-run impacts of the policies under consideration on growth, inequality, and poverty. The author's findings indicate that regardless of their impact on inequality, pro-growth policies lead to lower poverty levels in the long run. However, he also finds evidence indicating that some of these policies may lead tohigher inequality and, under plausible assumptions for the distribution of income, to higher poverty levels in the short run. These findings would justify the adoption of a pro-growth policy package as the center of any poverty reduction strategy, together with pro-poor measures that complement such a package by offsetting potential short-run increases in poverty.Services&Transfers to Poor,Public Health Promotion,Poverty Impact Evaluation,Economic Conditions and Volatility,Environmental Economics&Policies,Rural Poverty Reduction,Achieving Shared Growth,Inequality,Governance Indicators,Safety Nets and Transfers

A normal relationship ? Poverty, growth, and inequality

Using a large cross-country income distribution dataset spanning close to 800 country-year observations from industrial and developing countries, the authors show that the size distribution of per capita income is well approximated empirically by a lognormal density. The null hypothesis that per capita income follows a lognormal distribution cannot be rejected-although the same hypothesis is unambiguously rejected when applied to per capita consumption. The authors show that lognormality of per capita income has important implications for the relative roles of income growth and inequality changes in poverty reduction. When poverty reduction is the overriding policy objective, poorer and relatively equal countries may be willing to tolerate modest increases in income inequality in exchange for faster growth-more so than richer and highly unequal countries.Achieving Shared Growth,Inequality,Economic Conditions and Volatility,Services&Transfers to Poor,Poverty Impact Evaluation

Oil intensities and oil prices : evidence for Latin America

Crude oil prices have dramatically increased over the past years and are now at a historical maximum in nominal terms and very close to it in real terms. It is difficult to argue, at least for net oil importers, that higher oil prices have a positive impact on welfare. In fact, the negative relationship between oil prices and economic activity has been well documented in the literature. Yet, to the extent that higher oil prices lead to lower oil consumption, it would be possible to argue that not all the effects of a price increase are negative. Climate change concerns have been on the rise in recent years and fossil fuel consumption is generally viewed as one of the main causes behind it. Thus this paper explores whether higher oil prices contribute to lowering oil intensities (that is, oil consumption per unit of gross domestic product). The findings show that following an increase in oil prices, OECD countries tend to reduce oil intensity. However, the same result does not hold for Latin America (and more generally for middle-income countries) where oil intensities appear to be unaffected by oil prices. The paper also explores why this is so.Energy Production and Transportation,Oil Refining&Gas Industry,Markets and Market Access,Energy Demand,Environment and Energy Efficiency

Inequality in Latin America : determinants and consequences

Latin America is together with Sub-Saharan Africa the most unequal region of the world. This paper documents recent inequality trends in the Latin American region, going beyond traditional measures of income inequality. The paper also reviews some of the explanations that have been put forward to understand the current situation, and discusses why reducing income inequality should be an important policy priority. In particular, the authors discuss channels through which inequality can affect growth and output volatility. On the whole, the analysis suggests a two-pronged approach to reduce inequality in the region that combines policies aimed at improving the distribution of assets (especially education) with elements aimed at improving the capacity of the state to redistribute income through taxes and transfers.Inequality,Rural Poverty Reduction,Economic Conditions and Volatility,Achieving Shared Growth,Poverty Impact Evaluation

One-loop Parke-Taylor factors for quadratic propagators from massless scattering equations

In this paper we reconsider the Cachazo-He-Yuan construction (CHY) of the so called scattering amplitudes at one-loop, in order to obtain quadratic propagators. In theories with colour ordering the key ingredient is the redefinition of the Parke-Taylor factors. After classifying all the possible one-loop CHY-integrands we conjecture a new one-loop amplitude for the massless Bi-adjoint $\Phi^3$ theory. The prescription directly reproduces the quadratic propagators from of the traditional Feynman approach.Comment: 43 pages, new appendix added, few typos corrected. Accepted for publication in JHE

Non-planar one-loop Parke-Taylor factors in the CHY approach for quadratic propagators

In this work we have studied the Kleiss-Kuijf relations for the recently introduced Parke-Taylor factors at one-loop in the CHY approach, that reproduce quadratic Feynman propagators. By doing this, we were able to identify the non-planar one-loop Parke-Taylor factors. In order to check that, in fact, these new factors can describe non-planar amplitudes, we applied them to the bi-adjoint $\Phi^3$ theory. As a byproduct, we found a new type of graphs that we called the non-planar CHY-graphs. These graphs encode all the information for the subleading order at one-loop, and there is not an equivalent of these in the Feynman formalism.Comment: 35 pages, typos corrected, references adde

Comovement and Macroeconomic Interdependence: Evidence for Latin America, East Asia, and Europe

This paper analyzes common economic patterns across countries and economic sectors in Latin America, East Asia and Europe for the period 1970-94. This is done by means of an error-components model that decomposes real value-added growth in each country into common international effects, sector-specific effects and country-specific effects. We find significant comovement in the European and East Asian samples. In the Latin American sample, however, we find country-specific components to be considerably more important than common patterns. These results are robust to different sub-sample time spans and different sub-sample country groups.

Remittances and the real exchange rate

Existing empirical evidence indicates that remittances have a positive impact on a good number of development indicators of recipient countries. Yet when flows are too large relative to the size of the recipient economies, as those observed in a number of Latin American countries, they may also bring a number of undesired problems. Among those probably the most feared in this context is the Dutch Disease. This paper explores the empirical evidence regarding the impact of remittances on the real exchange rate. The findings suggest that remittances indeed appear to lead to a significant real exchange rate appreciation. The paper also explores policy options that may somewhat offset the observed effect.Economic Stabilization,Macroeconomic Management,Economic Theory&Research,Remittances,Achieving Shared Growth

Getting realabout inequality : evidence from Brazil, Colombia, Mexico, and Peru

Consumption baskets vary across households and inflation rates vary across goods. As a result, standard consumer price index (CPI) inflation may provide a misleading measure of the inflation actually faced by poor households, more so the more unequal the distribution of aggregate consumption across households. Likewise, changes in observed nominal consumption inequality may be very different from those in true inequality, that is, that measured using household-specific CPIs. The authors explore empirically these issues using household data covering nine episodes from four Latin American countries (Brazil, Colombia, Mexico, and Peru). They find that in these countries standard CPI inflation typically reflects the inflation rate faced by a rich consumer located in the 80 to 90 percentile of the distribution of consumption expenditure. In most episodes the authors also find that inflation was anti-rich-that is, the inflation faced by the richest consumers was higher than the inflation faced by the poorest consumers. As a result of this bias, the observed increases in nominal inequality generally exceed the actual changes in real inequality. These results are robust to correcting for quality change bias in the CPI, to the use of alternative price indices, and to the use of alternative inequality measures.Markets and Market Access,Economic Theory&Research,Access to Markets,Inequality,Consumption