Real exchange rates, saving and growth : is there a link ?

The view that policies directed at the real exchange rate can have an important effect on economic growth has been gaining adherents in recent years. Unlike the traditional"misalignment"view that temporary departures of the real exchange rate from its equilibrium level harm growth by distorting a key relative price in the economy, the recent literature stresses the growth effects of the equilibrium real exchange rate itself, with the claim being that a depreciated equilibrium real exchange rate promotes economic growth. While there is no consensus on the precise channels through which this effect is generated, an increasingly common view in policy circles points to saving as the channel of transmission, with the claim that a depreciated real exchange rate raises the domestic saving rate -- which in turn stimulates growth by increasing the rate of capital accumulation. This paper offers a preliminary exploration of this claim. Drawing from standard analytical models, stylized facts on saving and real exchange rates, and existing empirical research on saving determinants, the paper assesses the link between the real exchange rate and saving. Overall, the conclusion is that saving is unlikely to provide the mechanism through which the real exchange rate affects growth.Macroeconomic Management,Economic Stabilization,Debt Markets,Emerging Markets,Currencies and Exchange Rates

Fiscal redistribution and income inequality in Latin America

Income inequality in Latin America ranks among the highest in the world. It can be traced back to the unequal distribution of assets (especially land and education) in the region. But the extent to which asset inequality translates into income inequality depends on the redistributive capacity of the state. This paper documents the performance of Latin American fiscal systems from the perspective of income redistribution using newly-available information on the incidence of taxes and transfers across the region. The findings indicate that: (i) the differences in income inequality before taxes and transfers between Latin America and Western Europe are much more modest than those after taxes and transfers; (ii) the key reason is that, in contrast with industrial countries, in most Latin American countries the fiscal system is of little help in reducing income inequality; and (iii) in countries where fiscal redistribution is significant, it is achieved mostly through transfers rather than taxes. These facts stress the need for fiscal reforms across the region to further the goal of social equity. However, different countries need to place different relative emphasis on raising tax collection, restructuring the tax system, and improving the targeting of expenditures.Taxation&Subsidies,Emerging Markets,Debt Markets,Economic Theory&Research,Poverty Impact Evaluation

An empirical calibration of Lick indices using Milky Way Globular Clusters

To provide an empirical calibration relation in order to convert Lick indices into abundances for the integrated light of old, simple stellar populations for a large range in the observed [Fe/H] and [alpha/Fe]. This calibration supersedes the previously adopted ones because it is be based on the real abundance pattern of the stars instead of the commonly adopted metallicity scale derived from the colours. We carried out a long-slit spectroscopic study of 23 Galactic globular cluster for which detailed chemical abundances in stars have been recently measured. The line-strength indices, as coded by the Lick system and by Serven et al. (2005), were measured in low-resolution integrated spectra of the GC light. The results were compared to average abundances and abundance ratios in stars taken from the compilation by Pritzl et al. (2005) as well as to synthetic models. Fe-related indices grow linearly as a function of [Fe/H] for [Fe/H]>-2. Mg-related indices respond in a similar way to [Mg/H] variations, however Mgb turns out to be a less reliable metallicity indicator for [Z/H]<-1.5 . Despite the known Mg overabundance with respect to Fe in GC stars, it proved impossible to infer a mean [Mg/Fe] for integrated spectra that correlates with the resolved stars properties, because the sensitivity of the indices to [Mg/Fe] is smaller at lower metallicities. We present empirical calibrations for Ca, TiO, Ba and Eu indices as well as the measurements of H_alpha and NaD.Comment: 16 pages, 15 figures, to appear on A&

Strongly Variable z=1.48 FeII and MgII Absorption in the Spectra of z=4.05 GRB 060206

We report on the discovery of strongly variable FeII and MgII absorption lines seen at z=1.48 in the spectra of the z=4.05 GRB 060206 obtained between 4.13 to 7.63 hours (observer frame) after the burst. In particular, the FeII line equivalent width (EW) decayed rapidly from 1.72+-0.25 AA to 0.28+-0.21 AA, only to increase to 0.96+-0.21 AA in a later date spectrum. The MgII doublet shows even more complicated evolution: the weaker line of the doublet drops from 2.05+-0.25 AA to 0.92+-0.32 AA, but then more than doubles to 2.47+-0.41 AA in later data. The ratio of the EWs for the MgII doublet is also variable, being closer to 1:1 (saturated regime) when the lines are stronger and becoming closer to 2:1 (unsaturated regime) when the lines are weaker, consistent with expectations based on atomic physics. We have investigated and rejected the possibility of any instrumental or atmospheric effects causing the observed strong variations. Our discovery of clearly variable intervening FeII and MgII lines lends very strong support to their scenario, in which the characteristic size of intervening patches of MgII ``clouds'' is comparable to the GRB beam size, i.e, about 10^16 cm. We discuss various implications of this discovery, including the nature of the MgII absorbers, the physics of GRBs, and measurements of chemical abundances from GRB and quasar absorption lines.Comment: 14 pages, 3 figures, 1 table; ApJ Letters, accepte

MIUSCAT: extended MILES spectral coverage. I. Stellar populations synthesis models

We extend the spectral range of our stellar population synthesis models based on the MILES and CaT empirical stellar spectral libraries. For this purpose we combine these two libraries with the Indo-U.S. to construct composite stellar spectra to feed our models. The spectral energy distributions (SEDs) computed with these models and the originally published models are combined to construct composite SEDs for single-age, single-metallicity stellar populations (SSPs) covering the range 3465 - 9469\AA at moderately high, and uniform, resolution (FWHM=2.51\AA). The colours derived from these SSP SEDs provide good fits to Galactic globular cluster data. We find that the colours involving redder filters are very sensitive to the IMF, as well as a number of features and molecular bands throughout the spectra. To illustrate the potential use of these models we focus on the NaI doublet at 8200 \AA and with the aid of the newly synthesized SSP model SEDs we define a new IMF-sensitive index that is based on this feature, which overcomes various limitations from previous index definitions for low velocity dispersion stellar systems. We propose an index-index diagram based on this feature and the neighboring CaII triplet at 8600 \AA, to constrain the IMF if the age and [Na/Fe] abundance are known. Finally we also show a survey-oriented spectrophotometric application which evidences the accurate flux calibration of these models for carrying out reliable spectral fitting techniques. These models are available through our user-friendly website.Comment: 16 pages, 17 figures, 2 tables; MNRAS in press. Model predictions available at our website: http://miles.iac.e

A meta-analysis of the investment-uncertainty relationship

In this article we use meta-analysis to investigate the investment-uncertainty relationship. We focus on the direction and statistical significance of empirical estimates. Specifically, we estimate an ordered probit model and transform the estimated coefficients into marginal effects to reflect the changes in the probability of finding a significantly negative estimate, an insignificant estimate, or a significantly positive estimate. Exploratory data analysis shows that there is little empirical evidence for a positive relationship. The regression results suggest that the source of uncertainty, the level of data aggregation, the underlying model specification, and differences between short- and long-run effects are important sources of variation in study outcomes. These findings are, by and large, robust to the introduction of a trend variable to capture publication trends in the literature. The probability of finding a significantly negative relationship is higher in more recently published studies. JEL Classification: D21, D80, E22 1

A question of confidence. Is tourism as vulnerable to civil unrest as we think? A comparative analysis of the impact of Arab Spring on total reserves and tourism

This paper uses monthly data to compare how international tourism receipts and the overall economy responded to the Arab Spring Total Reserves were used as an indicator of the economy overall, because they reflect confidence in the economy through such factors as Foreign Direct Investment and the effects of capital flight. To examine the response, interrupted time series was employed, using the outbreak of Arab Spring as the key interruption. To separate the impact of Arab Spring from other events, two treated and two untreated cases were selected. The results show that tourist spending recovered faster than the overall economy