Accountability, 165

• in fiscal responsibility laws, 170

Adequacy rates

• calculation of, 151n16

• capital, 271f

• of contribution systems, 139–40

• of pensions, 140f, 144f

Africa, technology in, 49–50

Age groups

• female labor force participation by, 33f

• retirement and, 143

Aging, fiscal costs of, 150–52

Akinci, Ogze, 242

American Community Survey, 45

Anti-Drug Abuse Act, 90

Apparel sector, market share in, 68f

Arcia, Gustavo, 120

Arnone, Marco, 202

Asociación de Supervisores Bancarios de las Américas, 50

Asset market bubbles, 233

Asset values, 197

ATMs, 221

Autonomy, of central banks, 191

Bank concentration, 209t, 211t

Banking and Insurance Commission, 236

Banking correspondents, 224

Banking relationships, remittances and, 49–50

Banking sectors

• competition, 203

• indicators, 259f

Bank lending channel, 196n4

• in CAPDR, 204–10

Bank lending rates, 195

Bargaining power, 100

Barrio 18 gang, 104

Basel Committee on Banking Supervision (BCBS), 251, 257, 274

• on buffers, 267–69

Basel III, 245, 251, 267–68

BCBS. See Basel Committee on Banking Supervision

Beaton, Kimberly, 54

Bilateral arrangements, 49

Blake, G. O., 90

Blinder, Alan S., 210

Bootstrapping, 126

Borio, C, 274

Borrowing constraints, 225

• combined effects of, 228–29

• GDP and, 227f

• Gini coefficient and, 227f

• relaxing, 226–27

Brainard, William, 210

Brain drain, innovation and, 51

Budget caps, 145

Budget controls, health care and, 145

Budget deficits

• in CAPDR, 174–75

• targets, 173–74

Buffers

• BCBS on, 267–69

• countercyclical capital, 267–72, 270f

• rebuilding, 111

• to shocks, 111

CAFTA-DR. See Dominican Republic-Central America Free Trade Agreement

CAPDR. See Central America, Panama, and Dominican Republic

Capital adequacy ratio (CAR), 271f

Capital growth

• in CAPDR, 17–18, 20–21

• decline in, 18–19

• medium term trends in, 20–21

Capital requirements, sectoral, 247–48

CAR. See Capital adequacy ratio

Cellphones, female labor force participation and, 37

Central America, Panama, and Dominican Republic (CAPDR), 69f

• bank lending channel in, 204–10

• breakdown, 67f

• budget deficits in, 174–75

• capital growth in, 17–18, 20–21

• central banks in, 191

• comparative advantage in, 74f

• credit cycle and, 261–63, 275

• credit in, 258–72

• crime in, 87–90

• dummy, 208

• economic size, 235t

• emigration, 43

• exchange rates in, 194f

• exports of, 61, 64, 70

• financial markets in, 258–72

• financial sector, 200t, 201t

• fiscal gaps in, 142

• fiscal responsibility laws in, 170–80

• gender gap in, 29

• GFC and, 13

• growth in, 1

• GVCs and, 65–66

• health care in, 136–38, 141

• homicides in, 88

• inflation in, 194f

• infrastructure in, 34–35

• interest rates in, 194f

• international reserves in, 194f

• labor force participation, 30f

• macroprudential policy in, 240–54

• market access of, 72

• monetary policy in, 190–95, 197–204

• operations frameworks, 191–92

• PAYG in, 135

• pensions in, 135–36

• potential output of, 13

• product complexity in, 71f

• remittances in, 44f, 46–50

• remittances to, 48f

• synchronicity index, 261–62, 275

• trade agreements, 63f

• trade barriers in, 64f

• trade composition in, 68–71

• trade integration of, 62–68

• trade openness of, 62f, 235t

• transparency in, 193

• weighted average tarifs in, 63f

• working age population in, 20

Central banks

• autonomy of, 191

• in CAPDR, 191

• of Guatemala, 239–40

• independence of, 196n5, 202

• intervention of, 195

• loss function, 212

Cerutti, Eugenio, 241, 242

China, 64–65

Cobb-Douglas production function, 27

Cocaine, 88

Colombia, 230

Colon Free Zone, Panama, 67

Comparative advantage, in CAPDR, 74f

Compensation fragmentation, 120

Competition Authority (El Salvador), 21

Competition Commission (Costa Rica), 21

Competitiveness, remittances and, 55

Computers, female labor force

• participation and, 37

Consumer deposits, 259f

Consumption, remittances and, 52

Contribution rates

• pensions, 137f, 143–44

• raising, 142

Contribution systems

• adequacy of, 139–40

• in Dominican Republic, 139

• in El Salvador, 139

• in Panama, 139

Contributory benefits, in LAC, 137f

Coordination Committee, 235–36

Corruption Perception Index, 216

Costa Rica

• CAR in, 271f

• credit in, 276

• exports, 15–16

• growth in, 1–2

• health care in, 145

• household surveys, 36–37

• inflation in, 265

• microdata on, 38t

• pensions in, 138, 143t

• regression analysis, 38t

• social spending in, 112, 117, 121–22

• working age population in, 20

Countercyclical capital buffer, 267–72

• activation of, 270f

• in Dominican Republic, 270f

• in El Salvador, 270f

• in Guatemala, 270f

• in Honduras, 270f

• in Nicaragua, 270f

• in Panama, 270f

Country similarity index, 263

Country synchronicity index, 261, 275

Credit

• in CAPDR, 258–72

• in Costa Rica, 276

• in Dominican Republic, 276

• in El Salvador, 277

• excessive growth, 261

• gap, 265, 266f, 268f, 276–79

• GDP and, 260–61, 263–67

• growth, 54, 257

• in Guatemala, 277

• in Honduras, 278

• mispricing, 261

• in Nicaragua, 278

• quality, 54

• regression analysis and, 276–79

• remittances and, 54–55

• risk, 261

Credit channel, 195

Credit cycle

• CAPDR and, 261–63, 275

• by country, 262f

• estimating, 260–61

• expansionary, 269

• measures of, 275

• policy recommendations, 272–73

• similarity, 275

• synchronicity, 264

Crime

• calibration summary, 109t

• in CAPDR, 87–90

• derivation of equations in model of, 109

• direct costs of, 85–86

• drug trafficking and, 88

• economics and, 85

• effect of, 92

• in El Salvador, 91, 103–6

• firms and, 94–96

• GDP and, 93

• growth and, 90–94

• in Honduras, 91, 101–3

• indirect costs of, 85–86

• instrumental variables, 92–93

• labor productivity and, 99f

• in LAC, 87, 88f

• macroeconomic models and, 86–87

• measurement of, 85–86

• modeling, 98f

• occupational choices and, 97

• organized, 96–97

• output and, 99f

• policy experiments, 97–98, 100t

• policy recommendations, 106–7

• as priority problem, 86f, 90f

• trends in, 89f

• unemployment and, 99

• unionization and, 100

• vacancy-posting costs and, 100

• workers and, 94–96

Cross-country transmission, 208–10

Dabla-Norris, M. E., 219, 222

DACA. See Deferred Action for Childhood Arrivals

Data envelopment analysis (DEA), 114, 125

Decision-making, macroprudential, 237t, 238t

Deferred Action for Childhood Arrivals (DACA), 57

Deficit bias, 181

Delgado, Fernando, 240

Demand curves, 163

Demand drag, 160

Demographics, 6–7

• dividend delays, 134–35

• in LAC, 134f

• policies affecting, 145–46

Dependency ratios, 16, 17f

Deportations, 58

• criminal, 92f

• from United States, 91–94

Diamond-Mortensen-Pissarides (DMP), 94

Ding, X., 75

Direct costs, of crime, 85–86

Discount rate, money market rate and, 205t

Disinflation, 191

DMP. See Diamond-Mortensen-Pissarides

Dollarization, 10–11, 234

• financial, 199

• ratio, 199f

Domestic savings, 22–23

Domestic value, growth and, 77t

Dominican Republic

• CAR in, 271f

• contribution systems in, 139

• countercyclical capital buffer in, 270f

• credit in, 276

• economic complexity of, 15–16

• exports, 15–16

• fiscal policy in, 153–54, 159–62

• fiscal reform in, 160f

• growth in, 159–60

• pensions in, 143t

• poverty in, 3

Dominican Republic-Central America Free Trade Agreement (CAFTA-DR), 63

DPR. See Dynamic loan-loss provisioning requirements

Drug trafficking

• crime and, 88

• declines in, 101

Dynamic loan-loss provisioning requirements (DPR), 245–46

Economic activity, VAT and, 157f

Economic complexity

• of Dominican Republic, 15–16

• index, 71f

• of Panama, 15–16

Economic development, female labor force participation and, 31–32, 34

Economic impact, of trade integration, 76–78

Economics, crime and, 85

Education, 4f

• female labor force participation and, 32, 34–35

• gender gap in, 29

• in Guatemala, 113

• input-output combinations, 113f

• life expectancy and, 113f

• microdata on, 37

• net enrollment rates, 113f

• primary, 116f, 127t, 128t

• pupil-teacher ratios, 113f

• school enrollment, 33f

• secondary, 116f, 129t, 130t

• social spending on, 116f

• trade composition and, 75f

• years of schooling, 113f

Educational attainment, emigration and, 47f

Efciency gains, 117

El Salvador

• CAR in, 271f

• contribution systems in, 139

• countercyclical capital buffer in, 270f

• credit in, 277

• crime in, 91, 103–6

• fiscal responsibility laws in, 175–76, 181–83

• Gini index in, 230

• homicides in, 101f, 104f

• inequality in, 230–31

• pensions in, 139, 143t

• potential employment growth in, 16–17

• poverty in, 3

• pupil-teacher ratios in, 119

• reforms in, 136

• social spending in, 117–19

• TFP in, 16

• violence ink, 105

El Salvador Seguro, 105–6

Emerging markets, 189

Emigration, 7

• CAPDR, 43

• educational attainment and, 47f

• employment and, 46

• experience of, 44–46

• from LAC, 45

• Latin America and, 46f

• natural disasters and, 44–45

• negative effects of, 43

• from Northern Triangle, 44

• occupations and, 47f

• percent of population, 45f

• in 2015, 45f

• to United States, 45–46

• wages and, 47f

Employment

• emigration and, 46

• informality of, 134

• See also Unemployment

Enabling trade index, 73f

ENCOVI, 159

Entrepreneurship, 21

Escalafones, 118

Escape clauses

• fiscal responsibility laws, 169, 177f, 179

• in Honduras, 179

• in Panama, 179

Exchange rates

• in CAPDR, 194f

• inflation and, 213–14

• monetary policy and, 198–204

• short-term government securities, 196

Expansionary credit cycle, 269

Expenditure identities, 150

Exports

• baskets, 61, 70

• of CAPDR, 61, 64, 70

• complexity of, 70

• concentration, 69

• constraints on, 79f

• Costa Rica, 15–16

• diversifcation of, 73–74, 82

• Dominican Republic, 15–16

• interregional, 66f

• intraregional, 66f

• maquilas, 78

• portfolios, 70

• quality of, 77t

• regional, 66f

• to United States, 62

External fnance premiums, asset values and, 197

Farrell, M. J., 124

FDI. See Foreign direct investment

Female labor force participation, 22, 29–30

• by age groups, 33f

• cellphones and, 37

• computers and, 37

• contributions to, 36f

• drivers of, 31–33

• economic development and, 31–32, 34

• education and, 32, 34–35

• evidence on, from regression analysis, 32–36

• fertility and, 32, 34

• income and, 31–32

• infrastructure, 34–35

• LA5, 36f

• microdata on, 36–37

• policies affecting, 145

• policy recommendations, 37–40

• by school enrollment, 33f

• technology and, 37

• total investment and, 33f

• underlying factors, 33f

Fertility

• female labor force participation and, 32, 34

• microdata on, 37

Financial constraints

• country-specifc, 226f

• easing, 231–32

Financial development, 217

• GDP and, 218f

• improvement of, 231

• index, 219f

• in LAC, 220f

• in 1995, 220f

• policy implications, 231–32

• ranking across components, 221f

• stylized facts on, 219–22

• in 2013, 220f

Financial dollarization, 199

Financial markets, in CAPDR, 258–72

Financial sector, CAPDR, 200t, 201t

Financial sector policy, 10–12

Financial Stability Reports (FSR), 240

Firms, crime and, 94–96

Fiscal anchors, 178

Fiscal balance

• minus targeted balance, 173f

• outburn, 173/

Fiscal costs

• aging and, 150–52

• of health care, 140–41

Fiscal gaps, in CAPDR, 142–43

Fiscal policy

• in Dominican Republic, 153–54, 159–62

• growth and, 8–10

• in Guatemala, 155–59

• in Honduras, 153–55

• inequality and, 153–54

• paper, 170

• stances, 182f

• toolkit model, 163–64

Fiscal reform

• in Dominican Republic, 160f

• in Honduras, 156f

Fiscal responsibility laws

• accountability in, 170

• assessment of, 169

• in CAPDR, 170–80

• characteristics, 166–67

• coverage of, 177f

• defining, 166–67

• in developing countries, 170

• in El Salvador, 175–76, 181–83

• escape clauses, 169, 177f, 179

• fiscal anchors in, 178

• global, 186t, 187t

• guiding principles of, 165

• in Honduras, 178, 183

• implementation of, 169, 172

• key features, 175–80

• medium-term orientation, 180

• non-compliance, 176f

• numerical rules, 176f

• objectives of, 171

• operational targets in, 176f, 178

• in Panama, 178, 180–81

• policy recommendations, 183–84

• popularity of, 166

• preconditions for, 167–68

• rules in, 170

• sanctions and, 179

• scope of, 170

• stabilization mechanisms, 177f

• structural components of, 169

• Supreme Court and, 183

• sustainability and, 171

• time of adoption, 176f

• transitional provisions, 177f

• transparency in, 170, 176f, 180

• types of, 166

Foreign currency

• in balance sheets, 235f

• liabilities, 259f

• loans, 259f

Foreign direct investment (FDI), 80

Foreign exchange markets, 192

Formal financial sector, 199–202

FSR. See Financial Stability Reports

Gangs, 90f

Gargiulo, C, 120

GDP. See Gross domestic product

Gender gap, 22

• in CAPDR, 19

• in education, 29

• global, 29

• informal employment and, 30f

• unemployment, 30f

• See also Women

Germany, 64–65

GFC. See Global financial crisis

Gini index, 159

• borrowing constraints and, 227f

• in El Salvador, 230

• trade composition and, 75f

Global competitiveness index, 75f

Global Competitiveness Report, 32

Global financial crisis (GFC)

• CAPDR and, 13

• remittance and, 56

Global Financial Development Indicators, 216

Global value chains (GVCs)

• in CAPDR, 65–66

• global view of, 67f

• growth and, 77t

• participation in, 65–66, 67–68

Government securities

• long-term, 196

• secondary market for, 202–3

• short-term, 196

Grigoli, Francesco, 114

Gross domestic product (GDP)

• borrowing constraints and, 227f

• convergence of, 14f

• credit and, 260–61, 263–67

• crime and, 93

• early warning power and, 263–67

• evolution of, 14f

• financial development and, 218f

• growth and, 77t

• health care and, 151–52

• homicides and, 94f

• inequality and, 225–26

• migration and, 51f

• per capita real growth equation estimates, 77f

• remittances and, 51f

Gross national savings, 23f

Guatemala

• CAR in, 271f

• central bank of, 239–40

• countercyclical capital buffer in, 270f

• credit in, 277

• education in, 113

• fiscal policy in, 155–59

• health care in, 145

• household surveys, 36–37

• inequality in, 229–30

• microdata on, 39f

• pensions in, 139, 143t

• potential employment growth in, 16–17

• poverty in, 3

• regression analysis, 39f

• social spending in, 117, 119–20

• taxation in, 156–57

• TFP in, 16

GVCs. See Global value chains

Hadzi-Vaskov, M., 75

HALE. See Health-adjusted life expectancy

Health-adjusted life expectancy (HALE), 114

Health care, 131t, 132t

• budget controls and, 145

• in CAPDR, 136–38, 141

• in Costa Rica, 145

• expenditure calculations, 151–52

• fiscal costs, 140–41

• in Guatemala, 145

• in Honduras, 145

• international comparison of, 141t

• in LAC, 137f

• in Panama, 145

• policy options, 142–46

• public expenditure on, 136, 137f, 141

• reforms, 145

• as share of GDP, 151–52

• social spending, 115f, 116f

Heng, Dyna, 218, 219

Herrera, S., 114

Hispanics

• remittances and, 57f

• unemployment of, 56

• in United States, 56

Homicides, 4f

• in CAPDR, 88

• in El Salvador, 101f, 104f

• GDP and, 94f

• in Honduras, 101f

• in Northern Triangle, 85

• reduction of, 101–2

• robberies and, 92

• trends in, 89f

Honduran Social Security Institute (IHSS), 103

Honduras

• CAR in, 271f

• countercyclical capital buffer in, 270f

• credit in, 278

• crime in, 91, 101–3

• escape clauses in, 179

• fiscal policy in, 153–55

• fiscal reform scenarios, 156f

• fiscal responsibility laws in, 178, 183

• health care in, 145

• homicides in, 101f

• household surveys, 36–37

• inequality in, 155, 156f

• microdata on, 40t

• pensions in, 139

• police force in, 102

• poverty in, 3, 156f

• regression analysis, 40t

• social spending in, 112, 115–16, 120–21

Households, 222–24

• inclusion of, 223f

• in LAC, 223f

HP flter methodology, 274

Human capital, 6, 22f

• accumulation of, 51

• quality of, 21–22

IFS. See International Financial Statistics

IHSS. See Honduran Social Security Institute

Immigration

Latin America and, 46f

• laws, 90

• shifts in, 56–57

• United States and, 90

Immigration Reform and Control Act, 91

Implementation capacity, 172

Inclusion, 218–19

• of households, 223f

• indices, 222f

• of SMEs, 222–24

Income

• female labor force participation and, 31–32

• remittances and, 49f

Income per capita, trade composition and, 75f

Indirect costs, of crime, 85–86

Indirect value added, growth and, 77t

Inequality, 3f, 9–10

• in El Salvador, 230–31

• fiscal policy and, 153–54

• GDP and, 225–26

• growth and, 224–26

• in Guatemala, 229–30

• in Honduras, 155, 156f

• measures of, 155

• VAT and, 157f

Inflation, 10–11

• in CAPDR, 194f

• in Costa Rica, 265

• exchange rate regimes and, 213–14

• remittances and, 55

• targeting, 213–14

• unemployment and, 26–27

Informal employment, gender gap and, 30f

Informality, 217

Infrastructure

• in CAPDR, 34–35

• female labor force participation, 34–35

• growth and, 77t

• in LAC, 223f

• quality index, 4f

• in rural areas, 38

• trade composition and, 75f

• transportation, 80

Innovation

• brain drain and, 51

• supporting, 21

Input-output combinations

• education, 113f

• social spending, 115f

Institutional framework, for

macroprudential policy, 236–40

Institutional frameworks, 197

Integrated Trade Intelligence Portal (I-TIP), 64

Intensity-based indexes, 242

• liquidity and, 248f

Interbank market

• development of, 202

• interest rates, 195

Interest rates

• in CAPDR, 194f

• interbank market, 195

• long-term, 197

• long-term government securities and, 196

• pass-through, 207f

• short-term government securities and, 196

Intermediation costs, 225

• combined effects of, 228–29

• lowering, 228

International Financial Statistics (IFS), 216

International reserves, in CAPDR, 194f

Interregional exports, 66f

Interregional trade, 64

Intraregional exports, 66f

Intraregional trade, 64

Investment, supporting, 22–23

I-TIP. See Integrated Trade Intelligence Portal

Kapsoli, Javier, 114

LA6, 70

• product complexity in, 71f

Labor force participation

• CAPDR, 30y

• global, 30f

• in LAC, 134f

• See also Female labor force participation

Labor markets

• efficiency, 34

• formalization in, 145

• microdata on, 37

• policies affecting, 145–46

• in rural areas, 163

• transformation, 21–22

• in urban areas, 163

Labor productivity, crime and, 99f

LAC. See Latin America and the Caribbean

Laeven, Luc, 252

Latin America and the Caribbean (LAC), 218

• contributory benefits in, 137f

• crime in, 87, 88f

• demographics in, 134f

• emigration from, 45, 46f

• financial development in, 220f

• health care in, 137f

• households in, 223f

• immigration and, 46f

• infrastructure in, 223f

• labor in, 134f

• market access of, 72

• maternal mortality in, 3

• pensions in, 137f, 138f

• regional trade clusters in, 65f

• remittances to, 46

• trade integration in, 62–63

• United States and, 64–65

Laurens, Bernard, 202

Legal reforms, 192

Lending rates, 207f

Leverage ratio, 245

Life expectancy, 3

• education and, 113f

• health-adjusted, 114

Lim, Cheng Hoon, 240

Liquidity

• coverage ratio, 251n18

• instrument intensity, 248f

• macroprudential policy and, 241t, 250f

• tools, 248–51

Loan-deposit spreads, 230

Loan-to-value ratio, 247–48

Logistics performance, 73f

Long-term government securities, interest rates and, 196

Long-term interest rates, 197

Loss function, central banks, 212

Lowe, Phillip, 274

MACCIH. See Mission against corruption and impunity

Macroeconomic models

• crime and, 86–87

• stability of, 167

• VAT and, 155

Macroprudential authority, 239t

Macroprudential committee (MPC), 236

Macroprudential decision-making, 237t, 238t

Macroprudential policy, 11, 193, 233

• broad-based, 241t, 244–46, 244f

• in CAPDR, 240–54

• effectiveness of, 252–54

• indices, 240–41, 244f

• institutional framework for, 236–40

• instruments, 240–52

• liquidity and, 241t, 250f

• reserve requirements and, 249f

• results, 243–44

• sector-specifc, 241t

• structural tools and, 251–52

• systemic risks and, 234–36

Malnutrition, 3

Mano Dura, 103–4, 105

Maquilas, 67, 68

• exports, 78

• production activity in, 69

Marital status, microdata on, 37

Market access

• of CAPDR, 72

• of LAC, 72

Market diversifcation, 82

Market shares, in apparel sector, 68f

Maternal mortality, in Latin America, 3

Medium-Term Fiscal Framework (MTFF), 167

Mercosur, 81

Meza, Mynar, 240

Mi Bono Seguro, 159

Microdata

• on Costa Rica, 38t

• on education, 37

• on female labor force participation, 36–37

• on fertility, 37

• on Guatemala, 39f

• on Honduras, 40t

• on labor markets, 37

• on marital status, 37

Migration

• GDP and, 51f

• growth and, 50–52

• importance of, 43

• returning, 58

• See also Emigration; Immigration

Mink, M., 261

Mission against corruption and impunity (MACCIH), 103

Monetary policy, 10–12

• CAPDR, 190–95, 197–204

• data, 216

• exchange rate regimes and, 198–204

• frameworks, 189, 198–204

• moderning, 190–95

• rates, 204–5

• Sources, 216

• stabilization policy and, 210–13

Monetary transmission, mechanism, 195–97

Money markets, 192

• bank lending rates and, 205–6

• development of, 202

• discount rate and, 205t

• rates, 204–6, 205t

MPC. See Macroprudential committee

MRIO. See Multi-region input-output table

MS-13 gang, 104

MTFF. See Medium-Term Fiscal Framework

Multi-region input-output table (MRIO), 67

Multivariate Kalman flter, 27

NAIRU, 27

Natural disasters

• emigration and, 44–45

• remittances and, 53f

Net enrollment rates, 113f

Net Stable Funding Ratio, 251

New Keynesianism, 25

Nicaragua, 1

• CAR in, 271f

• countercyclical capital buffer in, 270f

• credit in, 278

• pensions in, 138, 143t

• social spending in, 117, 121

Non-compliance, fiscal responsibility laws, 176f

Noneconomic shocks, 56–57

Non-financial public sector debt, 181f

Non-parametric methods, 125

Nonperforming loans (NPLs), 54–55, 258, 259f

Nontarif barriers, 80–81

Northern Triangle, 1, 3, 5, 58

• emigration from, 44

• homicides in, 85

• robberies in, 87

NPLs. See Nonperforming loans

Occupations, emigration and, 47f

Okun’s law, 25

Old-age dependency ratio, 9

• increasing, 133

Olmstead-Rumsey, Jane, 242

Operational targets, in fiscal responsibility laws, 178

Organization of American States, 103

Organized crime, 96–97

Output shock terms, 26

Panama, 1, 243

• CAR in, 271f

• Colon Free Zone, 67

• contribution systems in, 139

• countercyclical capital buffer in, 270f

• debt objectives in, 178n16

• DPR and, 246n10

• economic complexity of, 15–16

• escape clauses in, 179

• fiscal responsibility laws in, 178, 180–81

• growth in, 1–2

• health care in, 145

• PAYG in, 139

• pensions in, 143t

• public sector debt in, 181f

• transportation infrastructure in, 80

Pang, G., 114

Parametric methods, 124–25

Parametric reforms, for pension systems, 143t

Participation costs, 224, 225

• combined effects of, 228–29

• lowering, 227–28

Pass-throughs, 206

Pay-as-you-go (PAYG), 133

• in CAPDR, 135

• in Panama, 139

• public spending on, 138

• reform of, 142

PDV. See Present discounted value

Pensions, 9

• adequacy ratios, 140f, 144f

• in CAPDR, 135–36

• characteristics, 137f

• contribution rates, 137f, 143–44

• in Costa Rica, 138, 143t

• without defined benefits, 151

• in Dominican Republic, 143t

• in El Salvador, 139, 143t

• fiscal costs, 138–40

• in Guatemala, 139, 143t

• in Honduras, 139

• in LAC, 137f, 138f

• main drivers, 140f

• in Nicaragua, 138, 143t

• in Panama, 143t

• parameters, 135–36, 136t

• parametric reforms of, 143t

• policy options, 142–46

• reforms, 142–44

• sustainability of, 139

Personal income tax, VAT and, 157

Philips curve, 25

• equations, 26

Plotnikov, Dmitry, 94

Police force, in Honduras, 102

Political procyclicality, 171–72

Potential employment growth

• in El Salvador, 16–17

• in Guatemala, 16–17

• medium term trends in, 20

Potential output growth, 14f

• of CAPDR, 13

• decline in, 18–20

• defining, 25

• determinants of, 19f

• evolution of, 14–18

• medium term trajectory of, 19–21

• shocks and, 26

• stochastic process for, 25

• theoretical primer on, 25–27

• trend output and, 25

Poverty, 3f

• in Dominican Republic, 3

• in El Salvador, 3

• in Guatemala, 3

• in Honduras, 3, 156f

• VAT and, 157f

Present discounted value (PDV), 151

Private investment, 23f

Product complexity

• in CAPDR, 71f

• in LA6, 71f

Product proximity, 72–73

• in CAPDR, 74f

Progressivity, 9–10

Prosecution, 96

Public expenditure, 8–9

• on health care, 136, 137f, 141

• on PAYG, 138

• on pensions, 139

• See also Social spending

Public sector debt

• non-financial, 181/

• in Panama, 181f

Pupil-teacher ratios, 113f

• in El Salvador, 119

• social spending and, 115f

RCA. See Revealed comparative advantage

R&D, 21

Real effective exchange rate (REER), remittances and, 55

Regional cooperation, 82

Regional Council of Financial Superintendent, 235–36

Regional exports, 66f

Regional trade clusters, in LAC, 65f

Regional value chains, 64

Regression analysis

• Costa Rica, 38t

• country-by-country, 53

• credit gap and, 276–79

• cross-country, 35t

• of female labor force participation, 32–36

• Guatemala, 39f

• Honduras, 40t

Regulatory capital, 259f

Regulatory environment, 202

Remittances, 43

• banking relationships and, 49–50

• to CAPDR, 44f, 46–50, 48f

• competitiveness and, 55

• consumption and, 52

• costs of, 48–49, 50f

• credit and, 54–55

• dependence on, 56–58

• GDP and, 51f

• GFC and, 56

• growth and, 50–52

• Hispanics and, 57f

• by income, 49f

• inflation and, 55

• to LAC, 46

• long-term effects of, 54

• natural disasters and, 53f

• REER and, 55

• revenue raised by, 52–53

• securitization of, 54

• sending, 48–49

• shocks and, 52

• short-term effects of, 54

• sizable, 46–50

• stabilizing role of, 52–56

• in sub-Saharan Africa, 49

• unemployment and, 57f

• United States and, 48

Replacement rates, 139

• calculation of, 151n16

Reporting systems, transparency of, 168

Reserve requirements, macroprudential policy and, 249f

Retirement, 139

• age of, 143

Revealed comparative advantage (RCA), 68–69

• CAPDR, 69f

• increasing, 73–74

• in new product groups, 69–70

Revenue

• collection of, 163

• mobilization, 153

• remittances raising, 52–53

Robberies

• homicides and, 92

• in Northern Triangle, 87

• trends in, 89f

Rule of law index, 4f

Rural areas

• infrastructure in, 38

• labor markets in, 163

Samarina, A., 261

Sanctions, fiscal responsibility laws and, 179

San Pedro Sula, 103

School enrollment, female labor force participation by, 33f

Sectoral capital requirements, 247–48

Sector-specifc tools, 246–48

Segalotto, Jean-Francois, 202

SFA. See Stochastic frontier model

Shocks

• buffers to, 111

• noneconomic, 56–57

• output shock terms, 26

• potential output growth and, 26

• remittances and, 52

Short-term government securities, interest rates and, 196

Simar, L., 126

Simulated minimum requirement, 271f

Small and medium enterprises (SMEs), 218–19, 223f

• inclusion of, 222–24

Social development, growth and, 3

Social Fiscal Responsibility Law, 181

Social programs, 9–10

Social spending, 229–30

• allocative efficiency, 125f

• benchmarking methodology, 124–32

• in Costa Rica, 112, 117, 121–22

• on education, 116f

• in El Salvador, 117–19

• empirical results, 114–18

• in Guatemala, 117, 119–20

• health care, 115f, 116f

• in Honduras, 112, 115–16, 120–21

• in Nicaragua, 117, 121

• policy recommendations, 118–23

• pupil-teacher ratios and, 115f

• trends in, 112–14

Stability, 165

• of macroeconomic models, 167

• remittances and, 52–56

Stabilization policy, monetary policy and, 210–13

Steady-states, 226

Stochastic frontier model (SFA), 125

Structural factors, 6

• growth and, 4f

Structural tools, macroprudential policy and, 251–52

Sub-Saharan Africa, remittances in, 49

Supply curves, 163

Supreme Court, fiscal responsibility laws and, 183

Sustainability

• fiscal responsibility laws and, 171

• of pensions, 139

Systemic risks

• defining, 234n1

• macroprudential policy and, 234–36

• measurement of, 252

• Sources of, 234

Tariffs, trade composition and, 75f

Taxation

• in Guatemala, 156–57

• increases, 161f

• mobilization, 154

• personal income, 157

• progressive, 153–54

• remittances and, 52–53

• See also Value added tax

Tax credits, 39–40

Tax net, 154

Technology

• in Africa, 49–50

• female labor force participation and, 37

Telecoms, 34

Temporary protected status (TPS), 56–57

Terms of trade, growth and, 77t

TFP. See Total factor productivity

Toolkit model, 163–64

• summary, 164f

Total bank credit, 259f

Total factor productivity (TFP), 13

• decline in, 18–19

• in El Salvador, 16

• growth, 14–15

• in Guatemala, 16

• medium term trends in, 20

• rebound in, 15

TPS. See Temporary protected status

Trade agreements

• CAPDR, 63f

• preferential, 80

Trade barriers, in CAPDR, 64f

Trade composition

• CAPDR, 68–71

• determinants of, 75f

• education and, 75f

• Gini index and, 75f

• income per capita and, 75f

• infrastructure and, 75f

• tariffs and, 75f

Trade determinants, 72–76

Trade expansion, structural factors, 72

Trade fows, 61

Trade initiatives, important, 79f

Trade integration

• of CAPDR, 62–68

• global context of, 62–68

• growth and, 77n15

• in LAC, 62–63

• as pillar of growth strategy, 61

• policy implications, 81–82

• spurring, 78

• supporting, 81–82

Trade liberalization, 7

Trade openness

• CAPDR, 62f, 235t

• growth and, 77t

Trade policy

• authorities’, 79f

• objectives, 79f

• regional view of, 78–81

• strategies, 79f

• survey results on, 79f

Transparency, 165

• in CAPDR, 193

• in fiscal responsibility laws, 170, 176f, 180

• improvements in, 180

• of reporting systems, 168

Transparency International, 216

Transportation infrastructure, in Panama, 80

Trend output

• defining, 25

• potential output growth and, 25

Trump, Donald, 57

Uncertainty penalty, 212

Unemployment

• crime and, 99

• evolution of, 26–27

• gender gap, 30f

• of Hispanics, 56

• inflation and, 26–27

• remittances and, 57f

Unionization, crime and, 100

United States

• deportations from, 91–94

• emigration to, 45–46

• exports to, 62–63

• Hispanics in, 56

• immigration and, 90

• LAC and, 64–65

• remittances and, 48

Univariate models, 264

Vacancy-posting costs, crime and, 100

Value added tax (VAT), 154

• economic activity and, 157f

• impact of, 157f

• increases in, 155

• indirect, 160

• inequality and, 157f

• macroeconomic models and, 155

• personal income tax and, 157

• poverty and, 157f

Van Eden, H., 166

VAR. See vector autoregression

VAT. See Value added tax

Vector autoregression (VAR), analysis, 206–7

Victimization surveys, 88–89

• evidence from, 90f

Violence, in El Salvador, 105

Wages, emigration and, 47f

War tax, 95

Weighted average tarifs, in CAPDR, 63f

Wilson, P. W., 126

Women

• labor force participation of, 22, 29–30

• unequal status of, 29

Workers, crime and, 94–96

Working age population, 17f

• CAPDA in, 20

World Bank, 50

• Global Financial Development Indicators, 216

World Development Indicators, 32

World Population Prospects report, 133, 150

World Prison Brief, 102

World Trade Organization, 62–63, 80

Yo Cambio, 105