Growth and Macroeconomic Fluctuations: The Case of Latin America

Based on time-series from 1960 to 1995, we show the existence –for Latin American countries– of a short and long run negative correlation between economic growth and uncertainty. The probable cause of such relationship is time-variant; it is only after 1990 that investment-based theories on the link between uncertainty and growth cannot be rejected by the data. Further, the data cannot support the claim that government expenditure explains the correlation between growth and uncertainty. Our results suggest that the average growth rate is endogenous to policy innovations. This implies that the long-run depends on short-run movements in activity, thereby casting some doubts on the conventional wisdom that assumes the dichotomy between an invariant steady state path and fluctuations around it.

Goverment policy multiplier, inflation and financial intermediation: Testing the New Keynesian theory

In a recent issue of the American Economic Review, several authors presented their views regarding what they believe constitute the core of macroeconomics. All of these authors agree that there is a short-run trade-off between inflation and unemployment. Yet there is a lack of consensus as for why this happens. The purpose of this paper is to test the validity of one of these possible explanations: the new Keynesian theory. For this purpose, we use evidence from 18 countries for the period 1964-1996, on the relation between inflation, output supply elasticity and government-policy multipliers. Empirical evidence seems to support the proposition derived from the new Keynesian school: the value of the fiscal multiplier will be smaller as the average inflation increases and the degree of financial intermediation declines. One consequence of this result is that the effectiveness of government expenditure as a mean to stabilize output depends to a large extent on the soundness of the domestic banking system.

The Impact of Infrastructure on Mexican Manufacturing Growth

This paper analyses the impact of infrastructure on the growth rate of the Mexican manufacturing sector. For such purpose, two measures of infrastructure are used: highways and electricity. Further, we also estimate the degree of returns to scale and the markup. We pooled two digit industries to obtain the estimates of the whole manufacturing sector. For the entire manufacturing sector, our results do not show evidence of increasing returns but the existence of market power cannot be rejected. We find that both types of public infrastructure have a significant effect on manufacturing growth and its inclusion reduces the estimated values of returns to scale and market power. Once we use sectoral data, we obtain mixed results: public infrastructure affects significantly only some sectors.

The interest rate pass-through by loan size: Evidence for Mexico, 2011-2019

This paper measures the impact of changes in the central bank's reference rate on bank lending rates at both the aggregate level and by loan size. Our data come from the payroll and personal loan markets in Mexico for the period comprising 2011 to 2019. We use an autoregressive model with distributed lags, which allows for the possibility of asymmetric effects. The results show, among other findings, that the pass-through is small; it is not necessarily positive; asymmetric behaviour cannot be ruled out; and, its value depends on the loan size. These results imply that the effectiveness of monetary policy is weakened, in addition to the fact that the reaction of banks to changes in the target interest rate may have distributional implications. The originality of the paper lies in the grouping of interest rates by loan size and the use of a methodology that allows us to assess the existence of asymmetries.  Its main shortcoming is the lack of data regarding the characteristics of the borrowers.El traspaso de la tasa de interés según el tamaño de los préstamos: Evidencia para México, 2011-2019  Este documento mide el impacto de los cambios en la tasa de referencia del banco central sobre las tasas de préstamos bancarios tanto a nivel agregado como por tamaño de préstamo. Nuestros datos provienen de los mercados de préstamos de nómina y personales en México para el periodo que comprende de 2011 a 2019. Utilizamos un modelo autorregresivo con rezagos distribuidos, que permite la posibilidad de efectos asimétricos. Los resultados muestran, entre otros hallazgos, que el traspaso es pequeño; no es necesariamente positivo; no se puede descartar un comportamiento asimétrico; y, su valor depende del tamaño del préstamo. Estos resultados implican una reducción de la eficacia de la política monetaria, además de que la reacción de los bancos a los cambios en el tipo de interés objetivo puede tener implicaciones distributivas. La originalidad del trabajo radica en la agrupación de las tasas de interés por tamaño de préstamo y en el uso de una metodología que permite evaluar la existencia de asimetrías. Su principal limitante es la falta de información concerniente a las características socioeconómicas de los deudores.

El Mercado de Préstamos Prendarios en México: Quién lo usa, cuánto cuesta y qué tanta competencia hay.

El objetivo del trabajo consiste en caracterizar el mercado de préstamos prendarios en México. Con base en una encuesta a las dieciocho instituciones más importantes del país y de datos provenientes de fuentes oficiales, se calcula el costo relativo de estos préstamos y se hacen estimaciones probabilisticas de los usuarios. Asimismo, se analiza el patrón de localización de los establecimientos que ofrecen dichos préstamos y el nivel de competencia existente. Nuestros resultados sugieren que es erróneo pensar que este producto es reflejo de la exclusión financiera. Se observa además que las tasas de interés de los préstamos prendarios son próximos al del crédito bancario relevante. Con base en un analisis radial se muestra que hay mucha competencia en este mercado pero hay espacio para una expansión. Una limitación del trabajo es que la base de datos es un corte transversal y su originalidad es la construcción de una base de datos y en ser la primera caracterización de este mercado. La relevancia de estos préstamos y el mostrar que se tiene una percepción errónea son una de las principales conclusiones del trabajo.The objective of this paper is to describe the pawnshop market loans in Mexico. Having surveyed the biggest institutions that offer such loans in the country and using data from official sources, we calculate its relative cost and use probabilistic estimations to describe its customers. Further, we analyze where these establishments are and measure how much competition they face. Our results suggest that it is erroneous to think that these loans are only used by people that are financially excluded. Further, we show that for equivalent credit lines, the interest rates of these loans are quite similar to those charged by the banking sector. Finally, it is shown that there is competition in this market, but there is room for expansion. One of the limitations of our paper is that the database is a cross-section. This paper is the first to describe how this market works in Mexico. Its originality is also based on the collection of a new database. The importance of these loans and exhibiting the misperception we have about them are one of the main conclusions of this paper

La desigualdad y el disímil impacto de la política monetaria

Inequality and the Heterogenous Impact of Monetary PolicyWe analyze whether changes in the central bank's target rate have differentiated impacts in the different municipalities of the country. For such purpose we divide them into five groups according to their marginalization and estimate the impact that changes in the target rate have on the flow of personal and payroll loans. Using panel data and ARDL-CS methodologies, two results are found. First, in the case of payroll loans, those who benefit from a drop in the target rate and those who are least affected when the target rate is increased are those who live in municipalities with very low marginalization. Second, the volume of personal loans and payroll loans are sensitive to changes in the target rate only when people live in municipalities with low and very low marginalization. The originality of this work is its municipal approach. Its main implication is that if the monetary authority wishes to increase its geographical impact, it must look for new instruments and support non-bank financial institutions.Se analiza si cambios en la tasa objetivo del banco central tiene un impacto diferenciado en los distintos municipios del país. Se divide a éstos en cinco grupos según su marginación y se mide el impacto que tienen las variaciones en la tasa objetivo sobre el flujo de préstamos personales y de nómina que reciben los pobladores de los municipios. Utilizando datos panel y metodologías GLS y ARDL-CS, se encuentran dos resultados. Primero, en el caso de los préstamos de nómina, los beneficiados por una baja en la tasa objetivo y los menos afectados cuando dicha tasa sube son los que viven en los municipios de muy baja marginación. Segundo, el volumen de los préstamos personales y de nómina es sensible a las modificaciones en la tasa objetivo sólo en el caso que los pobladores vivan en municipios de baja y muy baja marginación. La originalidad de este trabajo es su enfoque municipal. Su principal implicancia es que en caso la autoridad monetaria desee elevar el impacto geográfico de sus medidas, debe buscar nuevos instrumentos y apoyar a instituciones financieras no-bancarias