Do Exchange Rate Regimes Matter? Evidence for Developing Countries

Most countries which have experienced exchange rate crises over the last two decades have been under soft pegs or crawls. These exchange rate arrangements have normally succumbed in the face of massive capital inflow reversals --especially in developing countries-- thus provoking a search for options. Hard pegs and floating regimes seem to be the only viable options. This paper carries through an empirical analysis with panel data to study the relationship between the option of exchange rate regime and macroeconomic performance in developing countries. We use an extended and updated database to study the evidence for 154 countries over the period 1974-2004. Performance is measured by per capita GDP growth and its volatility. Our results show that floating rates tend to present higher levels of growth and lower levels of volatility in relation to other exchange rate arrangements. Intermediate regimes (soft and crawling pegs), on the other hand, score at the bottom of the growth rankings, while hard pegs appear to induce the largest growth volatility. In light of these results, it should not come as a surprise that the world is not moving to a single global currency, as some have predicted. The world is moving to fewer currencies, but at an extremely slow pace. Yet, floating rates will probably remain the most popular form of exchange rate regime over the next half century. This paper provides some basis for that popularity.exchange rate regimes, hard pegs, developing countries, growth regressions, volatility

The Effects of Vouchers on Academic Achievement: Evidence from Chile’s Conditional Voucher Program Juan A. Correa David Inostroza Francisco Parro Loreto Reyes Gabriel Ugarte Universidad Andrés Bello Marzo

Indexación: UNAB JEL Classi cation: H4; I2Abstract We use data from Chile's conditional voucher program to test the e ects of vouchers on academic achievement. Conditional vouchers have delivered extra resources to low-income, vulnerable students since 2008. Moreover, under this scheme, additional resources are contingent on the completion of speci c scholastic goals. Using a di erence-in-di erences approach, we nd a positive and signi cant e ect of vouchers on standardized test scores. Additionally, our results highlight the importance of conditioning the delivery of resources to some speci c academic goals when frictions exist in the education market

The rise and fall of income inequality in Chile

This paper presents evidence on a rise and fall in income inequality in Chile during the past two decades. We show that income inequality rises from 1990 to 2000 and then falls from 2000 to 2011. We perform simple but informative decompositions to figure out the contributing factors behind that dissimilarity in the behavior of inequality across those two subperiods. Our results are consistent with a story in which economic growth increases the demand for more educated workers, initially increasing inequality. However, those higher returns to education encourage agents to invest in higher education, producing a subsequent human capital deepening that reduces inequality at later stages of the development process

Do Exchange Rate Regimes Matter? Evidence for Developing Countries

Most countries which have experienced exchange rate crises over the last two decades have been under soft pegs or crawls. These exchange rate arrangements have normally succumbed in the face of massive capital inflow reversals --especially in developing countries-- thus provoking a search for options. Hard pegs and floating regimes seem to be the only viable options. This paper carries through an empirical analysis with panel data to study the relationship between the option of exchange rate regime and macroeconomic performance in developing countries. We use an extended and updated database to study the evidence for 154 countries over the period 1974-2004. Performance is measured by per capita GDP growth and its volatility. Our results show that floating rates tend to present higher levels of growth and lower levels of volatility in relation to other exchange rate arrangements. Intermediate regimes (soft and crawling pegs), on the other hand, score at the bottom of the growth rankings, while hard pegs appear to induce the largest growth volatility. In light of these results, it should not come as a surprise that the world is not moving to a single global currency, as some have predicted. The world is moving to fewer currencies, but at an extremely slow pace. Yet, floating rates will probably remain the most popular form of exchange rate regime over the next half century. This paper provides some basis for that popularity

The Chilean Labor Market: Job Creation, Quality, Inclusiveness, and Future Challenges

This paper analyzes recent labor market developments in the Chilean economy. The evidence shows a booming labor market with strong job creation since 2010. Most of the jobs created during the past three years are quality jobs—that is, jobs with a written contract and whose employers have made the corresponding payments toward pensions, healthcare, and unemployment insurance. We show that a combination of economic growth and specific policies seems to be the driving force behind the strong creation of quality jobs. Additionally, we show that the rapid job creation has been inclusive and constitutes one of the potential explanations for the fall in income inequality observed during the past three years. However, a further reduction in income inequality remains an important challenge for the future. Greater access to a quality education for vulnerable groups is the key to achieving that goal

Health Shocks, Human Capital, and Labor Market Outcomes

Health, human capital, and labor market outcomes are linked through complex connections that are not fully understood. We explore these links by estimating a flexible yet tractable dynamic model of human capital accumulation in the presence of health shocks using administrative data from Chile. We find that (i) human capital mitigates the negative labor market effects of health events, (ii) these alleviating effects operate through channels involving occupational choice, the frequency of exposure to health events, and access to health care, and (iii) the effect of health shocks on labor market outcomes is heterogeneous across industries and types of diagnoses

Health Shocks, Human Capital, and Labor Market Outcomes

Health, human capital, and labor market outcomes are linked through complex connections that are not fully understood. We explore these links by estimating a flexible yet tractable dynamic model of human capital accumulation in the presence of health shocks using administrative data from Chile. We find that (i) human capital mitigates the negative labor market effects of health events, (ii) these alleviating effects operate through channels involving occupational choice, the frequency of exposure to health events, and access to health care, and (iii) the effect of health shocks on labor market outcomes is heterogeneous across industries and types of diagnoses

Measuring the Impact of Financial Taxation on Capital

Using panel data from Chilean manufacturing plants, we present an empirical model to measure the impact of a financial transaction tax on capital stock. Our results show a statistically significant negative effect of the tax on the stock of capital. We also find that the impact on plants is heterogeneous, depending on the intensity of different types of capital held by plants. Indeed, plants with a higher percentage of infrastructure assets, such as land and buildings, are affected relatively less by the tax

Capital-Skill Complementarity: Does capital disaggregation matter?

Using Chilean manufacturing plants data, we�find: (1) the elasticity of substitution between capital and skilled labor is lower than the elasticity of substitution between capital and unskilled labor, and (2) the higher the technological component of the capital stock the larger the size of complementarity between capital and skilled labor. Our�findings show that capital, as an aggregate input, may under(over) state the complementarity between labor and the type of capital these workers actually use