Sistema Regional de Información
en línea para Revistas Científicas de América Latina,
el Caribe, España y Portugal

In this paper we use micro-data from income and expenditure surveys for seven Latin American countries. We estimate Engel equations and present stylized facts regarding cultural spending. Culture activities are a key indicator of a society development and therefore cultural spending decisions are illustrative of how individuals behave and interact within society. We find that culture behaves as a luxury good with income (expenditure) elasticities of cultural spending around 2. Further, we estimate elasticities for three components of cultural spending: spending in cinemas, theaters, music and dancing performances, spending in sports events and spending in other cultural activities. These expenditure elasticities are remarkably similar, also near 2. Additionally, we find that cultural spending is larger in urban areas, larger for households where the household head is a female and larger in household with more members but lower per child as the number of children increases. We find that cultural spending is positively correlated with the education level of the household head and that older household heads allocate a lower share of the budget to culture.

Previous studies focused on the comparison of the optimal output levels of regret- averse firms under uncertainty and firms under certainty. This paper extends the theory by further investigating the effects of regret-aversion on production. We compare the optimal output levels of regret-averse firms with purely risk- averse firms under uncertainty and firms under certainty. We first show that the linear-regret firms will surely produce more than their purely risk-averse counterparts and surely produce less than firms under certainty. Thereafter, we give sufficient conditions to ensure the regret-averse firms to produce more than the purely risk-averse counterparts and study the comparative statics of the optimal production. We also develop properties of regret-aversion on production.

This article examines the relationship between observed claim frequencies in the automobile insurance line and the evolution of selected economic magnitudes. From a variety of economic variables, we aim to identify the main factors affecting claim frequencies, while controlling for other legislative and demographic factors. Through a dynamic regression model, the analysis is conducted for three different categories of vehicles and for a variety of coverages. A comprehensive dataset from the main Spanish insurance companies is used to calibrate the model. The evidence might assist companies to improve ratemaking.

This paper analyzes the interaction between two political economy decisions by a government: whether to privatize a public firm and what environmental policy to choose (an environmental tax or an emission standard). We find that when market competition is weak the government does not privatize the public firm and sets an environmental tax. When it is intermediate the public firm is not privatized and the government sets an environmental standard. Finally, when market competition is strong the government privatizes the public firm and is indifferent between a tax and a standard.

It is commonly believed that the choice of adopting Corporate Social Responsibility (CSR) behaviours is beyond the scope of profit enhancement. In a unionised oligopoly with centralised wage setting and decreasing returns to scale technology, the present paper shows that the owners’ choice of the CSR engagement level is dictated by the firms’ purely selfish profit-seeking objective. In fact, profits under CSR are higher than under the standard profit-maximising rule. Moreover, the union, consumers and the social welfare on the whole with CSR are higher than without CSR: the firms’ owners social concern leads to a Pareto-superior outcome.

We analyze the impact of the most recent global financial crisis (GFC) on the seven most important Latin American stock markets. Our mean-variance analysis shows that the markets are significantly less volatile and, in general, investors prefer to invest in the post-GFC period. Our results from the Hurst exponent and runs and variance-ratio tests show that the randomness and efficiency have been improved after the GFC. The stochastic dominance test shows that the markets are efficient, there is no arbitrage opportunity due to the GFC in our studying period, and, in general, investors prefer investing in the post-GFC period. The results confirm that the 2008 global financial crisis does have some positive impacts on Latin American stock markets. Our findings provide important information for investors and market regulators in their decision making in investment and setting regulations.

We argue that societies sometimes choose not to enforce the law to gain “flexibility”. Especially developing countries face a dilemma between discretion and commitment to only partially-contingent rules. Rules are good for incentives, but discretion may be more “flexible”. We embed this dilemma in a political model and show that citizens will not support strong enforcement institutions unless the state is able to commit to sufficiently sophisticated redistributive policies.

The use of fair value in firms’ financial statements has created a lively debate both among academics and professionals. In this paper, we: (i) analyse the evolution of the objectives, priorities and direction of accounting; (ii) identify the antecedents to fair value and the current mixed model; (iii) briefly review the techniques in IFRS 13 to calculate fair value, and their hierarchical levels; (iv) analyse the use (or lack of use) of these fair value hierarchies under IFRS (and particularly, the IFRS 9 case); (v) compare IFRS 9 focus with the preferences of financial statements’ users with respect to fair value levels; and (vi) suggest a plausible long-term solution that reconciles the preferences of financial statement users with the techniques contained in existing regulation by suggesting a plausible refinement to the definition of OCI.

Under IFRS accounting standards, there are many situations in which the credit quality of a counterparty must be estimated. These include, for example, credit value adjustment of derivatives under IFRS 13; expected loss provisioning under IFRS 9; or own borrowing rate estimation under IFRS 16. In many cases, the inputs needed (generally a conditional probability of default (PD) or a yield to maturity (YTM) can be directly observed in the market or inferred from the quoted price of financial/credit instruments (e.g. liquid par CDSs or bonds), but in other cases this information is not available. With regard to the latter, we propose two models for internally estimating the credit quality of a counterparty as a basis (a first step) for obtaining the corresponding PD or YTM for said counterparty. The models (Financial Ratios Scoring and Merton KMV Structural Model) are based in part on previous literature, but they are more “universal” and better adapted to accounting purposes. For inputs, the models use public information about the counterparty (primarily financial information obtained from financial statements and other market inputs), and comparable companies.

Over the last forty years ago, fair value has increasingly been used in IASB and FASB accounting standards. In this sense, there has been significant debate with regard to the relevance and reliability of fair value as a measurement basis. In principle, IASB and FASB conceptual frameworks are based on the Utility Paradigm, and fair value should be used if it offers relevant information for investors. In this article we analyse previous fair value literature, focusing on financial instruments and value relevance. We structure the literature according to the different lines of research, and we describe the findings for each. The authors find that fair value is the model that better reflects risk management activities. Fair value information is generally relevant to investors. The evidence is higher in Level 1 and Level 2 fair value measurements.