Wage share and economic growth in Latin America, 1950-2011

This article builds series of wage shares in gross domestic product (GDP) for 15 Latin American economies individually and as a group for the period 1950-2010. Using different methodologies, it is established that wage share is non-linear and has undergone two major cycles. The article discusses various authors, especially classic and post-Keynesian thinkers, who have explored the relationship between wage share in GDP and economic activity. It is also shown that the post-Keynesian approach is relevant in explaining that the main variables determining real gdp variations include wage share, gross capital formation and exports of goods and services. However, the contribution of wage share to real output growth has declined from the 1980s onwards.

Is price dispersion always an indication of price discrimination?

It has been established for a long time that there is significant dispersion in prices charged for seemingly homogeneous goods. This may happen in competitive markets because the world is not frictionless, and certainly in other markets where price discrimination is carried out by firms with oligopolistic power. This paper is the first survey of the economic literature on price dispersion that addresses the following three key issues: i) its characteristics as a result of optimizing search behavior; ii) its relevance as a reflection of price discrimination and its consequences for social welfare and policy intervention; and iii) the empirical evidence of price dispersion. By contributing to a better understanding of price dispersion, this survey may help in the design and implementation of competition and anti-trust policies

The earnings share of total income in Latin America, 1990-2010

This article analyses the share of total income represented by employment earnings in the countries of Latin America over the last two decades. It first considers the wage share of gross domestic product (gdp) and then adds in the earnings of self-employed workers. The findings indicate that both total wages and total earnings declined as a share of gdp in most of the region’s countries over the period, although there were some exceptions. The reduction in earnings inequality seen over the past decade was not usually accompanied by an increase in the gdp share of earnings. This means that the improvement in personal income distribution was not matched by an improvement in functional distribution.

An assessment of the economic impact of climate change on the Energy Sector in Trinidad and Tobago

The energy sector is a dominant one in Trinidad and Tobago and it plays an important role in the twin-island republic‟s economy. In 2008, the share of the energy sector in gross domestic product (GDP) amounted to approximately 48% while contributing 57% to total Government revenue. In that same year, the sector‟s share of merchandise exports was 88%, made up mainly of refined oil products including petroleum, liquefied natural gas (LNG), and natural gas liquids (Central Bank of Trinidad and Tobago, 2009). Trinidad and Tobago is the main exporter of oil in the Caribbean region and the main producer of liquefied natural gas in Latin America and the Caribbean. The role of the country‟s energy sector is, therefore, not limited to serving as the engine of growth for the national economy but also includes providing energy security for the small island developing States of the Caribbean. However, with its hydrocarbon-based economy, Trinidad and Tobago is ranked seventh in the world in terms of carbon dioxide (CO2) emissions per capita, producing an estimated 40 million tonnes of CO2 annually. Almost 90% of these CO2 emissions are attributed directly to the energy sector through petrochemical production (56%), power generation (30%) and flaring (3%). Trinidad and Tobago is a ratified signatory to the United Nations Framework Convention on Climate Change and the Kyoto Protocol. Although, as a non-Annex 1 country, Trinidad and Tobago is not required to cut its greenhouse gas emissions under the Protocol, it is currently finalizing a climate change policy document as well as a national energy policy with specific strategies to address climate change. The present study complements the climate change policy document by providing an economic analysis of the impact that climate change could have on the energy sector in Trinidad and Tobago under the Intergovernmental Panel on Climate Change alternative climate scenarios (A2 and B2) as compared to a baseline situation of no climate change. Results of analyses indicate that, in the short-run, climate change, represented by change in temperature, is not a significant determinant of domestic consumption of energy, electricity in particular, in Trinidad and Tobago. With energy prices subsidized domestically and fixed for years at a time, energy price does not play a role in determining electricity demand. Economic growth, as indicated by Gross Domestic Product (GDP), is the single major determinant of electricity consumption in the short-run. In the long-run, temperature, GDP, and patterns of electricity use, jointly determine electricity consumption. Variations in average annual temperature due to climate change for the A2 scenario are expected to lead to an increase in electricity consumption per capita, equivalent to an annual increase of 1.07% over the 2011 baseline value of electricity consumption per capita. Under the B2 scenario, the average annual increase in electricity consumption per capita over the 2011 baseline value is expected to be 1.01%. The estimated economic impact of climate change on electricity consumption for the period 2011-2050 is valued at US$ 142.88 million under the A2 scenario and US$ 134.83million under the B2 scenario. These economic impact estimates are equivalent to a loss of 0.737% of 2009 GDP under the A2 climate scenario and a loss of 0.695% of 2009 GDP under the B2 scenario. On the energy supply side, sea level rise and storm surges present significant risks to oil installations and infrastructure at the Petroleum Company of Trinidad and Tobago (PETROTRIN) Pointe-a-Pierre facilities (Singh and El Fouladi, 2006). However, data limitations do not permit the conduct of an economic analysis of the impact of projected sea level rise on oil and gas production.

Pricing and spread components at the Lima Stock Exchange

This paper analyses three aspects of the share market operated by the Lima Stock Exchange: (i) the short-term relationship between the pricing, direction and volume of order flows; (ii) the components of the spread and the equilibrium point of the limit order book per share, and (iii) the pricing, order direction and trading volume dynamic resulting from shocks in the same variables when lagged. The econometric results for intraday data from 2012 show that the short-run dynamic of the most and least liquid shares in the General Index of the Lima Stock Exchange is explained by the direction of order flow, whose price impact is temporary in both cases.

Meta-analysis of the income and price elasticities of gasoline demand: public policy implications for Latin America

By means of a meta-analysis, this article sets out to estimate average values for the income and price elasticities of gasoline demand and to analyse the reasons for the variations in the elasticities reported by the literature. The findings show that there is publication bias, that the volatility of elasticity estimates is not due to sampling errors alone, and that there are systematic factors explaining these differences. The income and price elasticities of gasoline demand differ between the short and long run and by region, and the estimation can appropriately include the vehicle fleet and the prices of substitute goods, the data types and the estimation methods used. The presence of a low price elasticity suggests that a fuel tax will be inadequate to control rising consumption in a context of rapid economic growth.