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Browsing Documentos de Trabajo by Author "Alfaro-Ureña, Alonso"
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- Análisis histórico del tipo de cambio real en Costa RicaThe Real Exchange Rate (RER) is a relative price that determines the allocation of resources in an economy, therefore it has an impact on economic activity and, in addition, reflects the conditions that affect competitiveness in international trade. Its analysis and interpretation must be carried out in a complementary way with internal and external macroeconomic variables. In this paper, the RER in Costa Rica is analyzed from a historical perspective for the period 1957-2020, together with the trajectory of its long-term macroeconomic fundamentals and the exchange rate regime in force at each moment. There is also included an estimation of the equilibrium real exchange rate (ERER) using the approach called Behavioral Equilibrium Exchange Rate (BEER). It is documented that the macroeconomic fundamentals of the ERER have varied substantially in ways that affected the RER in different directions, and that the latter has mostly remained on a path consistent with the equilibrium dictated by its macroeconomic fundamentals.
- Efectos macroeconómicos de una depreciaciónAfter abanding the crawling peg regime in october 2006, the Costa Rican economy has experienced two abrupt depreciation episodes, in 2008 and 2014. The analysis of these two episodes shows that the observed depreciation is related to the increase of inflation, interest rates, and the lower economic growth. Within the labor market the depreciation episodes are related to lower employment and lower real wage. In this document we complement this descriptive analysis with the results of a counterfactual exercise based on Laverde (2015) in which we show the macroeconomic implications of having kept the crawling peg during the years after 2006. We also show the impact of a sudden devaluation of 5% induced by the Central Bank
- Expectativas de inflación en Costa RicaThe Banco Central de Costa Rica (BCCR) is currently transitioning to an Inflation Targeting (IT) regime. In such context, it is relevant for the monetary authority to characterize in the most complete way possible the inflation expectations of the population, both in the particular elements of the forecasts and in the processes by which agents take information into account for their individual predictions. This paper documents the analysis of the inflation expectations data contained in the Monthly Survey of Inflation and Exchange Rate Expectations. We test several hypotheses such as rational and adaptive expectations. The results show significant biases in those expectations, while there is also a lack of learning from past errors by the agents surveyed.
- Firm Export Dynamics in Interdependent MarketsEstimamos un modelo de la dinámica de exportación de empresas que incluye complementariedades entre países. La firma decide a dónde exportar resolviendo un problema de elección discreta combinatoria dinámica, para el cual desarrollamos un algoritmo de solución que supera los desafíos computacionales inherentes a la gran dimensionalidad de su espacio de estados y conjunto de opciones. Según la estimación de nuestro modelo, las empresas experimentan reducciones de costos al exportar a países que están geográfica o lingüísticamente cercanos entre sí, o que comparten acuerdos comerciales profundos; y los países, especialmente los pequeños, que comparten estas características con destinos atractivos, reciben significativamente más exportaciones que en ausencia de complementariedades.
- Gains from Trade: the Costa Rican CaseOne of the oldest and most interesting questions in the economic literature is how to quantify the gains from trade. Recently, Costinot & Rodrguez-Clare (2013) (CRC) developed a methodology that uses the World Input Output Database (WIOD) to compute this value for a list of countries. Costa Rica has never been part of this database given the lack of appropriate data. However, with the publication of a new Input Output Table for Costa Rica, the Foreign Trade Ministry (COMEX) was able to develop a domestic version of the WIOD that includes the country. This allows for counterfactual exercises in which we compare the current situation with autarky and other average tariff levels. As CRC show, this can be done using different productive structures and competition schemes in the economy. The results can provide valuable information on how much a small open economy like Costa Rica's can benefit from international trade, and what are the differences in the results when compared to similar countries.
- Importancia relativa de los beneficios intangibles de la Inversión Extranjera Directa (IED) en Zonas Francas en Costa RicaThis paper quantifies intangible benefits that arise from the interaction of multinational companies in the Free Trade Zone regime with their workers and with companies of Costa Rican capital (domestic). We compare those benefits to the corresponding benefits of multinationals that operate outside this regime. Specifically, we calculate the increase in productivity that domestic firms experience for supplying multinationals, and the additional salary (or wage premium) experienced by multinational workers compared to what they would receive by working in domestic companies. We find that those new suppliers of multinationals in the Free Trade Zone experience a 12% increase in their productivity from the first year after the start of the supply relationship, while those that supplied multinationals outside of this regime only received a 5% productivity increase. Likewise, the wage premium of the multinational company outside the Free Trade Zone is 6.2%, while the wage premium of multinationals in the Free Trade Zone is 14.3%.
- Indices de credibilidad del Banco Central de Costa Rica en la transición a Metas InflaciónThis paper computes six indexes that measure the monetary policy credibility of the Banco Central de Costa Rica, in its current transition to Inflation Targeting. The indexes, developed by Cecchetti and Krause (2002), Mendonça (2004), Sicsú (2005), Nahon and Meurer (2009), and a new one proposed in this paper, were calculated using the Monthly Survey of Inflation and Exchange Rate Expectations. All indexes show similar patterns over the sample, and the same happens when indexes for each of the strata of the sample are computed. The results show three periods where credibility has increased, with subsequent falls. The international and domestic conditions in which these movements happened are described in the paper. There is evidence that the monetary policy rate changes precede movements of the credibility indexes and not the other way around. There is also evidence of simultaneity of the inflation series with respect to the credibility indexes. The last data points show a stagnation of credibility as measured by the indexes.
- Labor Demand Dynamics in Costa RicaThis paper studies the determinants of the labor demand in Costa Rica through firm level data. It also characterizes formal employment during the last 15 years through a set of stylized facts. The results suggest that: (i) the neoclassical theory of employment holds, (ii) wages are a stronger determinant for labor demand in the manufacturing and construction industries, (iii) employment is more persistent in larger firms, (iv) larger and more technological industries adjust their headcount more heavily to changes in wages and revenue and (v) Costa Rican labor demand is more sensitive to changes in wages but less to changes in production than similar economies.
- Migración de la banda cambiaria hacia un régimen de flotación administradaThis document describes the historical context of the exchange rate regime of Costa Rica up to January of 2015, as well as the opportunity to migrate to a more flexible exchange rate market. The document discusses the most relevant arguments that the authorities must take into consideration when making this type of decision. For example, we discuss the potential impact to Costa Ricans and the economic activity, and details on the legal implications of such a decision. Finally, we discuss the most appropriate communication strategies to let know the general population of a change like this.
- Misallocation and Productivity in Costa RicaThis paper documents the effect of resource misallocation on Costa Rica's aggregate total factor productivity (TFP) using the Hsieh and Klenow (2009) methodology. The model suggests theoretical TFP gains of around 50%-60% for the overall economy and 10%- 15% for the manufacturing sector when the United States' level of efficiency is used as a benchmark. Evidence of a deterioration in the efficiency of resource allocation over the period 2005-2015 was not found, and misallocation seems to be greater in the agricultural sector. Small and large firms face advantageous output distortions relative to medium-sized firms, and small firms tend to also face disadvantageous capital distortions. Furthermore, our results also suggest that small firms have experienced higher growth in both capital and output wedges. Finally, distortions create incentives for firms to exit the market and thwarts the entrance of new participants in an industry.
- Responsible Sourcing? Theory and evidence from Costa RicaAlfaro-Ureña, Alonso; Faber, Benjamin; Cecile, Gaubert; Manelici, Isabela; Vásquez-Carvajal, José PabloCada vez es más común que empresas multinacionales (CMNs) impongan estándares de "Abastecimiento Responsable" (AR) a sus proveedores en todo el mundo, tales como requisitos sobre la retribución de los trabajadores, los beneficios y las condiciones laborales que le proporcionan a sus trabajadores. ¿Estas políticas son simplemente "palabras vacías" o tienen un impacto en los proveedores expuestos y sus trabajadores? ¿Cuál es la incidencia en el bienestar de AR en los países de abastecimiento? Para responder a estas preguntas, desarrollamos un modelo cuantitativo de equilibrio general de AR y lo combinamos con una base de datos única y reciente. En la teoría, mostramos que las implicaciones para el bienestar de AR son ambiguas, dependiendo de una interacción entre lo que es similar a un impuesto a la exportación (+) y una distorsión en el mercado laboral (-). Empíricamente, combinamos la casi totalidad de despliegue de códigos de AR por parte de filiales de CMNs en Costa Rica, del 2009 al 2019, con transacciones de empresa a empresa y con los microdatos de las empresas con sus respectivos empleados. Descubrimos que la implementación de AR conduce a reducciones significativas en las ventas de las empresas y en el empleo en los proveedores expuestos, un aumento en los salarios de los trabajadores inicialmente de bajos ingresos y una disminución en la proporción de empleo de bajos salarios. Luego, utilizamos los efectos estimados y los microdatos para calibrar el modelo y cuantificar contrafactuales de equilibrio general. Descubrimos que si bien las políticas de AR de las CMNs han generado ex ante ganancias significativas entre aproximadamente un tercio de los trabajadores de bajos salarios empleados en los proveedores expuestos, la mayoría de los trabajadores de bajos salarios pierden debido a efectos indirectos adversos en sus salarios y en el índice de precios domésticos.
- The Effects of Joining Multinational Supply Chains: New Evidence from Firm-to-Firm LinkagesThis paper investigates the effects of becoming a supplier to multinational corporations (MNCs) using administrative data tracking all firm-to-firm transactions in Costa Rica. Event-study estimates reveal that after starting to supply to MNCs, domestic firms experience strong and persistent improvements in performance, including the expansion of their workforce by 26% and gains in standard measures of total factor productivity (TFP) of 6-9% four years after. Moreover, the sales of domestic firms to buyers other than the first MNC buyer grow by 20%, both through a larger number of buyers and larger sales per buyer. We propose a simple model by which TFP and reputation affect the number of buyers, but TFP alone affects sales conditional on buying. We find a model-based increase in TFP of 3% four years after. Finally, we collect survey data from managers in both domestic firms and MNCs for further insights on mechanisms. Our surveys suggest that becoming suppliers to MNCs is transformative for domestic firms, with changes ranging from new managerial practices to better reputation.
- The Effects of Multinationals on Workers: Evidence from Costa RicaEsta investigación estima los efectos de corporaciones extranjeras multinacionales sobre los trabajadores. Con este fin, se utilizan las bases de microdatos disponibles sobre las relaciones entre empresas, y entre trabajadores y empresas en Costa Rica, y se emplea una estrategia de variable instrumental para aprovechar la expansión de empresas multinacionales al país. En primera instancia, se encuentra una prima salarial directa de 9% al trasladarse a una multinacional. Esta prima se desprende del ofrecimiento de salarios por encima del mercado en lugar de ser una compensación por condiciones laborales indeseables. Luego, se estudia el efecto de multinacionales sobre los empleados de empresas nacionales. Las multinacionales mejoran las alternativas externas de los trabajadores debido a que alteran el nivel y composición de la demanda laboral al ofrecer empleos con prima salarial. Además, el desempeño de los trabajadores en empresas locales también incrementa debido a los encadenamientos productivos con multinacionales; posteriormente, estos shocks en desempeño se reflejan en el nivel de salario. Se muestra que la tasa de crecimiento del ingreso anual de un empleado que experimenta un aumento de una desviación estándar en la exposición a multinacionales en su mercado laboral o en firma es un punto porcentual más alta que la de un empleado idéntico sin cambios en exposición. Por último, se construye un modelo con el objetivo de racionalizar la evidencia y estimar los parámetros estructurales que explican la fijación de salarios en empresas nacionales. Las multinacionales se modelan como firmas que ofrecen prima salarial y que adquieren insumos de firmas nacionales. Los trabajadores de empresas nacionales son sensibles a las opciones laborales externas, según las estimaciones del modelo. Las empresas nacionales deben incurrir en costos de reclutamiento y capacitación para contratar nuevos empleados. El costo marginal de contratación para la empresa promedio se estima en 90% del ingreso anual de un trabajador con salario de mercado. Por este alto costo, los empleados pueden extraer una porción del incremento en la renta que proviene de encadenamientos más intensivos con multinacionales.
- The Information Rigidities and Rationality of Costa Rican Inflation ExpectationsCosta Rican inflation expectations cannot be characterized as rational under any existing definition of the term. They cannot be categorized as adaptive either, since in addition to historical data on inflation, other macroeconomic variables are important in explaining inflation expectations. Instead, the sticky information model is considered a more sophisticated framework to assess inflation expectations of Costa Rican agents. Results are based on the Monthly Survey of Inflation and Exchange Rate Expectations elaborated and published by the Banco Central de Costa Rica. This paper gathers inconclusive evidence that the expectations from this survey are subject to information rigidities. However, this paper shows how a simulated survey, based on a sticky information model, is capable of replicating features from the observed survey.
- Transformación estructural y productividad sectorial en Costa RicaThis paper documents the process of structural transformation in Costa Rica during six decades starting in 1950. It is widely documented that countries that grow in terms of income have a shift of employment away from the agricultural sector to the manufacturing and services sector. This same pattern can be observed in Costa Rica. However, this process has some peculiarities that will be discussed. This paper presents counterfactual exercises that use the model presented in Duarte & Restuccia (2010). Depending on the counterfactual, the model has been calibrated to match the data for the Costa Rican economy or the United States.