The Dictator and the Parties A Study on Policy Co-operation in Mineral Economies

This paper develops a game to study the possibility of co-operative behaviour in a situation where the political system is dominated by two strong, opportunistic parties competing in an economy highly dependent on the export of a commodity. Since a binding agreement as an external solution is unlikely to succeed due to the close association between the incumbent party and the government (the guardian), the paper explores the extent to which co-operation between political parties that alternate in office can rely on self-enforcing strategies to provide an internal solution. For appropriate values of the probability of re-election and the discount factor, it is possible to rely on reciprocity to sustain an early-stopping equilibrium. However, cooperation is undermined by low values of re-election probability out of current revenues and party myopia. In those circumstances, the self-policing solution might not be viable and an institutional response would be necessary. The game also sheds some light on the apparent paradox of situations in some mineral- rich democracies (such as the recent Venezuelan experience) where the enjoyment of considerable external revenues is followed by a period of economic stagnation, a deterioration of political stability, and the surge of a dictatorship threat.Political Economy, Non-cooperative games, Democracy, Mineral Economies, Venezuela

Real Exchange Rates in Latin America: what does the 20th Century reveal?

Using a new data set for the whole period 1900-2005, this paper analyses the behaviour of real multilateral exchange rates in the six largest economies of Latin America. The main aims are to identify any trends or shifts in the equilibrium position and to test for mean reversion. The key findings are the following: i) evidence of real depreciation at the end of the period, compared to the starting position; ii) significant differences in real exchange rates derived using symmetric and asymmetric definitions; iii) a moderate level of intracountry synchronicity, though results vary across periods and pairs of countries; iv) not rejection of the unit-root hypothesis for the series in levels; however, v) the series can be made stationary after allowing for trends structural breaks. For the adjusted series, the half-life of the process ranges from 0.8 to 2.5 years.

Real exchange rates in Latin America : what does the 20th century reveal?.

Using a new data set for the whole period 1900-2005, this paper analyses the behaviour of real multilateral exchange rates in the six largest economies of Latin America. The main aims are to identify any trends or shifts in the equilibrium position and to test for mean reversion. The key findings are the following: i) evidence of real depreciation at the end of the period, compared to the starting position; ii) significant differences in real exchange rates derived using symmetric and asymmetric definitions; iii) a moderate level of intracountry synchronicity, though results vary across periods and pairs of countries; iv) not rejection of the unit-root hypothesis for the series in levels; however, v) the series can be made stationary after allowing for trends structural breaks. For the adjusted series, the half-life of the process ranges from 0.8 to 2.5 years.

La economía venezolana en el siglo XX

Editada en la Fundación SEPIEste trabajo estudia el desarrollo económico venezolano desde una perspectiva regional. La riqueza petrolera le ha dado a Venezuela una oportunidad única para ampliar su capacidad productiva y mejorar el bienestar de la población. Sin embargo, el país ha experimentado un deterioro marcado en su economía e instituciones en tiempos recientes. El artículo comienza con una visión comparativa con base en algunos indicadores de bienestar. Luego explora las implicaciones de las bonanzas de los productos de exportación y establece paralelismos con el caso del cobre y el salitre chilenos y el caucho amazónico. A continuación analiza el impacto de la Gran Depresión y el proceso de industrialización. Para terminar, o&ece un conjunto de conclusiones.This paper studies the process of economic development in Venezuela from a regional perspective. Oil wealth has given the country a unique opportunity to expand its productive capacity and improve the living standards. However, the country has experienced a drastic deterioration of its economy and institutions in recent times. The paper begins with a comparison based on welfare indicators. Then, it explores the economic implications of commodities and establishes parallels with the export booms of copper and nitrate in Chile and rubber in the Amazon región. Next, it analyses the impact of the Great Depression and the industrialisation strategy. Finally, a set of conclusions is presented.Publicad

Real exchange rates in Latin America : what does the 20th century reveal?

Using a new data set for the whole period 1900-2005, this paper analyses the behaviour of real multilateral exchange rates in the six largest economies of Latin America. The main aims are to identify any trends or shifts in the equilibrium position and to test for mean reversion. The key findings are the following: i) evidence of real depreciation at the end of the period, compared to the starting position; ii) significant differences in real exchange rates derived using symmetric and asymmetric definitions; iii) a moderate level of intracountry synchronicity, though results vary across periods and pairs of countries; iv) not rejection of the unit-root hypothesis for the series in levels; however, v) the series can be made stationary after allowing for trends structural breaks. For the adjusted series, the half-life of the process ranges from 0.8 to 2.5 years

A Century of Economic Growth in Latin America

This paper makes a contribution to the study of economic growth in developing countries by analysing the six largest Latin American economies over 105 years within a two-equation framework. Confirming previous findings, physical and human capital prove to be key determinants of GDP per capita growth. However, a more controver- sial result is an overall negative conditional correlation between trade openness and GDP per head growth – though openness has a positive link via investment. The evi- dence also shows that macroeconomic instability has been a drag on long-term growth in the region.Economic Growth; Investment; Openness; Latin America

Revealing the diversity and complexity behind long-term income inequality in Latin America: a new dataset, 1920-2011

The period between 1920 and 1980 is of great importance for the study of inequality in Latin America because of the occurrence of state-led, protected industrialisation amid structural, demographic and institutional transformations. Although there are valuable contributions at the country level, the study of income inequality from a broad regional perspective has been hindered by limitations of comparable metrics. To address this gap a new dataset has been assembled including Argentina, Brazil, Chile, Colombia, Mexico, and Venezuela. The approach adopted distinguishes four occupational groups: the top group includes employers, managers and professionals; the remaining three groups are defined according to the workers' skill level, largely receiving wage income. This allows for the calculation of inequality between and within groups, as well as overall Ginis for all income and wage income. The frequency of the series is annual, making it possible to track closely inequality trajectories. Despite being a high-inequality region, this new evidence reveals great diversity of outcomes across the six countries and complexity within the occupational structure. There is no single inequality metric that captures the whole story. Looking forward, this dataset opens the door to undertake econometric analysis to unpick the inequality contribution of key drivers such as the terms of trade and structural change.This research has received financial support as part of the project PGC2018-095821-B-I00: (MCIU/AEI/FEDER, UE)