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Item Open AccessDescripción, antecedentes y riesgo fiscal y macroeconómico del Proyecto de Acto Legislativo que modifica el Sistema General de Participaciones (SGP) *Ospina-Tejeiro, Juan José; Bejarano, Jesús; Herrera-Rojas, Andrés Nicolás; Quintero-Jácome, Manuela; López-Valenzuela, David Camilo; Ramos-Forero, Jorge Enrique; Zapata-Álvarez, Steven; Banco de la República - ColombiaDocumentos de Trabajo RIEC - No. 109, 2024-12-02Item Open Access
Signaling Specific Skills and the Labor Market of College GraduatesBusso, Matias; Montaño, Sebastián; Muñoz-Morales, JuanWe use census-like data and a regression discontinuity design to study the labor market impacts of a signal provided by a government-sponsored award given to top-performing students on a nationwide college exit exam in Colombia. Students who can signal their high level of specific skills earn seven to ten percent more than identical students lacking such a signal. The signal allows workers to find jobs in more productive firms and sectors that better use their skills. The positive returns persist for up to five years. The signal favors workers from less advantaged groups who enter the market with weaker signals.Documentos de Trabajo RIEC - No. 108, 2023-09-13Item Open AccessThe monetary and macroprudential policy framework in Colombia in the last 30 years: the lessons learnt and the challenges for the futureGomez-Pineda, Javier Guillermo; Murcia, Andrés; Cabrera-Rodríguez, Wilmar Alexander; Vargas-Herrera, Hernando; Villar-Gómez, Leonardo; Banco de la República - ColombiaOver the past 30 years, monetary and macroprudential policy in Colombia evolved towards the pursuit of a low and credible inflation target and a stable financial system. The protracted inflation that began in the early seventies was defeated at the turn of the century with the help of the new framework for monetary policy formulation, inflation targeting. In the field of macroprudential policy, the financial crisis of the late nineties led to important institutional developments in the formulation and coordination of macroprudential policy, as well as in the assessment of systemic risk. Along with these developments, important lessons have been learnt. One is that, to preserve macroeconomic stability, the price stability objective must be complemented with the financial stability objective, as well as with macroprudential policy. Another lesson is that the new institutional framework for monetary policy formulation helped Banco de la República overcome 25 years of inflation, then called moderate inflation. The challenges for the future include to continue preserving price and financial stability, strengthening the role of the Banco de la República in macroprudential policy, and to continue strengthening the channels of international coordination and cooperation in macroprudential policy.Documentos de Trabajo RIEC - No. 107, 2023-07-04Item Open AccessState-Dependent Exchange Rate Pass-ThroughCarrière-Swallow, Yan; Firat, Melih; Furceri, Davide; Jiménez, DanielWe estimate how the rate of pass-through from the exchange rate to domestic prices varies across states of the economy and depends on the shocks that drive fluctuations in the exchange rate. We confirm several results from the literature and uncover new facts. Drawing on the experience of a large sample of advanced and emerging market economies over the past 30 years, we document that exchange rate pass-through is significantly larger during periods of high inflation and elevated uncertainty. Using a novel identification strategy, we also show that pass-through is higher when exchange rate fluctuations are driven by U.S. monetary policy.Documentos de Trabajo RIEC - No.106, 2023-05-18Item Open AccessThe Global Financial Cycle and Country Risk in Emerging Markets During Stress Episodes: A Copula-CoVaR ApproachMelo-Velandia, Luis Fernando; Romero-Chamorro, José Vicente; Ramírez-González, Mahicol Stiben; Banco de la República - ColombiaIn this paper,we analyze the tail-dependence structure of credit default swaps (CDS) and the global financial cycle for a group of eleven emerging markets. Using a Copula-CoVaR model,we provide evidence that there is a significant taildependence between variables related with the global financial cycle, such as the VIX, and emerging market CDS. These results are particularly important in the context of distressed global financial markets (right tail of the distributions of the VIX) because they provide international investors with relevant information on how to rebalance their portfolios and a more suitable metric to analyze sovereign risk that goes beyond the traditional CoVaR. Additionally, we present further evidence supporting the importance of the global financial cycle in sovereign risk dynamics.Documentos de Trabajo RIEC - No. 105, 2023-05-08Item Open AccessIntroduction to the Symposium on the Shadow Economy, Tax Behaviour, and InstitutionsGranda-Carvajal, Catalina; Kogler, Christoph; Universidad de AntioquiaDocumentos de Trabajo RIEC - No. 104, 2023-05-03Item Open AccessEvolución de las transferencias monetarias en ColombiaAcosta, Karina; Taboada-Arango, Bibiana; Otero-Cortés, Andrea; Bonet-Morón, Jaime; Banco de la República - ColombiaDocumentos de Trabajo RIEC - No. 103, 2023-04-24Item Open AccessYoung Politicians and Long-Term PolicyDahis, Ricardo; de las Heras, Ivan; Saavedra, Santiago; Universidad del RosarioA fundamental difficulty in policy-making is that policies often have costs today but benefits far into the future. This difficulty is particularly salient to climate change and environmental conservation policy. A critical dimension in this trade-off is the age of politicians, which impacts their life expectancy, career concerns, and what education they received. We study this trade-off in the case of Brazilian mayors and environmental outcomes, using a regression discontinuity design for close elections. We find that when a young politician is elected, there is a reduction in deforestation and greenhouse gas emissions, without significant effects on municipal gross domestic product. Young politicians allocate more spending to education and reducing liabilities, suggesting that the time horizon is important. Our study of mechanisms suggests young mayors matter because they belong to a new cohort, not because of age per se.Documentos de Trabajo RIEC - No. 102, 2023-02-10Item Open AccessThe Leading Role of Bank Supply ShockBonilla-Mejía, Leonardo; Villamizar-Villegas, Mauricio; Ruiz-Sánchez, María Alejandra; Banco de la República - ColombiaThis paper studies the impact of the Covid-19 pandemic on corporate credit in Colombia. We first exploit the geographic and temporal variation in the disease spread to estimate the effect of local exposure to the virus on credit. Our estimates indicate that neither local exposure to the virus, nor the sector-specific mobility restrictions had an impact on credit. We then assess the role of bank supply shocks. We create a measure of bank exposure, reflecting the geographic heterogeneity in pandemic vulnerability and deposits, and estimate its effect on credit. Results indicate that bank-supply shocks account for a credit contraction of approximately 5.2%. To further disentangle the role of bank supply shock, we control for the interaction between firm and time fixed-effects and restrict the sample to municipalities that were relatively spared from the pandemic, finding similar results. Most of the bank supply effects are driven by firms that are small, young, and have relatively low liquidity.Documentos de Trabajo RIEC - No. 101, 2023-02-08Item Open AccessEl efecto de cambios en la regulación del mercado mayorista de electricidad en Colombia en un modelo estructural de subastas complejasBalat, Jorge; Carranza, Juan Esteban; Martin, Juan David; Riascos, Alvaro J; Banco de la República - ColombiaDocumentos de Trabajo RIEC - No. 100, 2023-02-06Item Open AccessCOVID-19 and assimilation: an analysis of immigration from Venezuelan in ColombiaGarcía-Suaza, Andrés; Gallego, Juan Miguel; Mayorga, Juan D.; Mondragón-Mayo, Angie; Sepúlveda, Carlos; Sarango Iturralde, Alexander; Universidad del RosarioThe increase in global immigration phenomena has impacted local labor markets. The process of social and economic assimilation is crucial to ensure the well-being of both natives and immigrants. This article analyzes the impacts of immigration from Venezuela to Colombia, differentiating the effects of recent and long-term immigration on natives and immigrants. We find that immigration has decreased employment and hourly wages; and increased informality, while the impact on unemployment is null. These effects are higher among immigrants in comparison with the native population. Our results show that even when adverse effects on labor market outcomes are estimated, there is evidence of adaptability to the immigration shock and that an assimilation process is taking place.Documentos de Trabajo RIEC - No. 99, 2022-11-01Item Open AccessThe external effects of public housing developments on informal housing: The case of Medellín, ColombiaPosada, Hector M.; García-Suaza, Andrés; Londoño, David; Universidad del RosarioProvision of new subsidized housing projects has proven to be an effective alternative to reduce the high level of quantitative housing deficit in developing countries. However less is known about how these housing projects affect the quality of the surrounding habitat, especially when projects are located in areas with high levels of precarious housing. Using highly granular public information from Medellin, Colombia, we estimate the causal effect of new social housing projects (VIS) on housing quality indicators in the neighborhood. To estimate this causal effect, we use the geological quality of the land as an instrumental variable for a measure of exposition to new social housing projects. Our results show that new VIS projects lead to a reduction of informal housing, poverty, and crime in the neighborhood.Documentos de Trabajo RIEC - No. 98, 2022-09-20Item Open AccessA trade-off from the future: How risk aversion may explain the demand for illiquid assetsFerraz, Eduardo; Mantilla, César; Universidad del RosarioWe use a three-period model adopting a recursive definition of consumption to explore the optimal delegation that a present self, aware that her near-future self is present-biased but better informed, will make to protect her far-future self against income shocks. The model captures the present self's trade-off between using commitment mechanisms, restricting the near-future self's agency through illiquid savings, and profiting from the near-future self's better information about future shocks. Our main result states that agents with higher risk aversion can cover better against utility losses from time-inconsistent consumption through the commitment mechanism. Given the evidence of women being more risk-averse than men, this result provides the micro-foundation for the gender gap in adopting financial commitment devices, especially among single individuals.Documentos de Trabajo RIEC - No. 97, 2022-09-13Item Open AccessImmigration, Wages, and Employment under Informal Labor MarketsDelgado-Prieto, LukasThis paper studies the labor market impacts of Venezuelan immigrants in Colombia. Exploiting spatial variation in exposure, I nd a negative e ect on native wages driven by the informal sector (where immigrants are concentrated) and a reduction in native employment in the formal sector (where the minimum wage binds for many workers). To explain this asymmetry, I build a model in which rms substitute formal for informal labor in response to lower informal wages. Consistent with the model's predictions, I document that the increase in informality is driven by small rms that use both labor types in production.Documentos de Trabajo RIEC - No. 96, 2022-08-22Item Open AccessCalidad del empleo agregado, formal e informal: un análisis para la economía colombiana en el periodo 2007 - 2019Montoya-Arbelaez, Jaime Alberto; Jurado, Andres Julian; Universidad de AntioquiaDocumentos de Trabajo RIEC - No. 95, 2022-08-22Item Open AccessThe Leading Role of Bank Supply ShocksBonilla-Mejía, Leonardo; Ruiz-Sánchez, María Alejandra; Villamizar-Villegas, Mauricio; Banco de la República - ColombiaThis paper studies the impact of the Covid-19 pandemic on corporate credit in Colombia. We first exploit the geographic and temporal variation in the disease spread to estimate the effect of local exposure to the virus on credit. Our estimates indicate that neither local exposure to the virus, nor the sector-specific mobility restrictions had an impact on credit. We then assess the role of bank supply shocks. We create a measure of bank exposure, reflecting the geographic heterogeneity in pandemic vulnerability and deposits, and estimate its effect on credit. Results indicate that bank-supply shocks account for a credit contraction of approximately 5.2%. To further disentangle the role of bank supply shock, we control for the interaction between firm and time fixed-effects and restrict the sample to municipalities that were relatively spared from the pandemic, finding similar results. Most of the bank supply effects are driven by firms that are small, young, and have relatively low liquidity.Documentos de Trabajo RIEC - No. 94, 2022-08-22Item Open AccessThe effects of Monetary Policy on Capital Flows A Meta-AnalysisVillamizar-Villegas, Mauricio; Arango-Lozano, Lucía; Castelblanco, Geraldine; Fajardo-Baquero, Nicolás; Ruiz-Sánchez, María Alejandra; Banco de la República - ColombiaWe investigate whether central banks are able to attract or redirect capital flows, by bringing together the entire empirical literature into the first quantitative meta-analysis on the subject. We dissect policy effects by the type of flow and by the origin of the monetary shock. Further, we assess whether policy effects depend on factors that drive investors to either search for yields or fly to safety. Our findings indicate a mean effect size of inflows in the amount of 0.09% of quarterly GDP in response to either a 100 basis point (bp) increase in the domestic policy rate or a 100bp reduction in the external rate. However, the effect size under a random effect specification is much lower (0.01%). Factors that significantly attract inflows include foreign exchange reserves, output growth, and financial openness, while factors that deter flows include foreign debt, capital controls, and departures from the uncovered interest rate parity. Also, both local and global risks matter (global risks exerting a larger pressure). Finally, we shed light on differences across the different types of flows: banking flows being the most responsive to monetary policy, while foreign direct investment being the least responsive.Documentos de Trabajo RIEC - No. 93, 2022-08-22Item Open AccessCredit and Saving Constraints in General Equilibrium: A Quantitative ExplorationGranda-Carvajal, Catalina; Hamann, Franz; Tamayo, Cesar E.In this paper we build an incomplete-markets model with heterogeneous households and firms to study the aggregate effects of saving constraints and credit constraints in general equilibrium. We calibrate the model using survey data from Colombia, a developing country in which informal saving and credit frictions are pervasive. Our quantitative results suggest that reducing savings costs increases selection into formal saving, but the effect on aggregate outcomes and welfare is dwarfed by that of a policy which ameliorates borrowing constraints. Such a policy improves resource allocation and increases returns to capital and labor, resulting in higher savings and welfare gains for both households and firms.Documentos de Trabajo RIEC - No. 92, 2022-08-05Item Open AccessHow Peace Saves Lives: Evidence from ColombiaPerilla, Sergio; Prem, Mounu; Purroy, Miguel E.; Vargas, Juan F.; Universidad del RosarioThe victimization of civilians and combatants during internal conflicts causes large long-term socioeconomic costs. Unfortunately, it is not clear whether peace negotiations can significantly reduce this burden, as the risk of victimization may linger well after conflicts end. One key reason for the such persistence is the presence of antipersonnel landmines, which are hidden underground and remain active for decades. Looking at the recent experience of Colombia, we study the conditions under which peace agreements reduce landmine blasts and victimization. Our findings point to the importance of post-conflict information sharing and comprehensive humanitarian mine clearance campaigns.Documentos de Trabajo RIEC - No. 91, 2022-06-17Item Open AccessThe Intergenerational Transmission of College: Evidence from the 1973 Coup in ChileBautista, María Angélica; González, Felipe; Martínez, Luis R.; Muñoz, Pablo; Prem, Mounu; Universidad del RosarioWe study the transmission of higher education across generations using the arrival of the Pinochet dictatorship to Chile in 1973 as natural experiment. Pinochet promoted a large contraction in the number of seats opened for new students across all universities. Using census data, we find that parents who reached college age shortly after 1973 experienced a sharp decline in college enrollment. Decades after democratization, we observe that their children are also less likely to enroll in higher education. The results imply large and persistent downstream effects of educational policies implemented half a century ago.Documentos de Trabajo RIEC - No. 90, 2022-06-16