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RESEARCH

Publications

Latin American Journal of Central Banking, Volume 4, Issue 1, March 2023, 100083 (with Ricardo Chavarin and Alfredo Salgado)

Abstract The COVID-19 pandemic has undeniably caused both supply and demand shocks. Nevertheless, it is uncertain to what extent each factor contributed more to the evolution of prices and economic activity at different points since the onset of the pandemic. Whether inflationary pressures are mainly due to demand or supply shocks is an important matter for the stance of monetary policy. By employing a sign-restricted SBVAR, we study supply and demand factors as potential sources of heterogeneity in sectoral performance of economic activity in Mexico. We find that during the peak contraction in 2020-2Q, the demand shock was the dominant source of fluctuation across most sectors. Moreover, we assess the extent to which economic activity responds to foreign shocks and find that domestic demand shocks are the primary drivers of GDP fluctuations in 2020-2Q, with external demand and supply conditions and exchange rate shocks also playing significant roles. In contrast, since the beginning of 2021, external supply has negatively contributed to the variation of several sectors, particularly in industrial production, whereas domestic and external demand factors have generally positively contributed.

Working Papers

Abstract Preschool programs have rapidly expanded in low- and middle-income countries, yet concerns persist about their quality and effectiveness in promoting children’s development. This study examines the impact of making preschool compulsory in Mexico on primary school performance using a staggered difference-in-differences methodology. Results indicate an improvement in Grade 5 test scores by 0.05-0.16 standard deviations. However, the reform widened disparities between the most and least marginalized localities, underscoring the need for targeted policies. Smaller preschool groups and extended preschool attendance improved cognitive skills, despite the higher proportion of lower-skilled teachers. High-quality early childhood education is crucial for long-term academic success in low- and middle-income countries.

Abstract In the last two decades, a number of Latin American countries expanded preschool availability and made attendance compulsory. In 2002, Mexico launched an educational reform that mandated three years of preschool before entering primary school, gradually phasing-in the requirement. Using nationwide longitudinal administrative educational data, household survey data, and a quasi-experimental regression-discontinuity approach, this paper investigates the medium-term impacts (5-6 years after the reform, during primary school) and longer-term impacts on young adults of the 2004-2005 requirement to attend preschool for at least one year. Results show that the preschool mandate increased preschool years attended, enhanced fifth- and sixth-grade cognitive scores in math and Spanish, improved noncognitive skills, heightened student engagement, delayed primary-school entry, lowered failure rates, and led to greater schooling attainment for young adults nearly 20 years post-reform.

Abstract Despite the benefits of preventive healthcare, uptake is typically low. This paper studies how embedding healthcare in a conditional cash transfer program affects utilization by exploiting the roll-out of Progresa in Mexico. We estimate a sizable 12% increase in outpatient visits at public clinics, driven by children and women aged 20-49. This translates into improvements in reproductive healthcare and screenings for chronic diseases. However, these effects are also accompanied by increased congestion, measured by waiting times, and reductions in quality of care. Overall, this suggests that the benefits of this policy lever may carry unintended displacement effects.

Previous working papers

Abstract This paper studies if attending preschool increases educational attainment in primary school. For this, I utilize the 2002 policy change that made preschool mandatory in Mexico. I estimate a sizeable 0.04 standard deviation (SD) increase in test scores four years after the implementation of the reform, driven by a 2 percentage points increase in prior preschool enrollment. This effect on educational attainment persisted when students graduated from elementary school. I further observe that the increase in test scores did not differ between females and males. Regarding policy design, I find that, despite the increase in preschool enrollment, the student-teacher ratio did not change. Furthermore, an increase in the share of high-skilled teachers accompanied the policy. Overall, policies like the one studied in this paper can improve students' test scores with persisting effects throughout elementary school.

(with Amado Crôtte, Jorge Narezo-Balzaretti, and Marc Jacob)

Abstract We seek to find out if the bicycle is, effectively, a substitute for the car in Mexico City (CDMX) and calculate the effect of the said substitution if it exists. For this purpose, we use a differences-in-differences methodology. We utilize as exogenous variation the discontinuity in gasoline supply in some gas stations in CDMX during the second and third week of 2019. The gasoline shortage increased the opportunity cost of traveling by car, which allows us to identify if users migrated from cars to bicycles. We used data from Ecobici, CDMX's first bike-sharing system, to build the control and treatment groups. We find that the number of trips per hour in Ecobici increased in a range of 4 to 7 during the shortage period. In addition, we observe that the effect is not transitory since there is an increase in the number of Ecobici trips per hour after the shortage. During the first month, the use of Ecobici increased by 7 trips per hour, and during the first three and five months, the use of Ecobici increased by 3 trips per hour. For this reason, we conclude that the bicycle is a substitute for internal combustion vehicles for the areas where the Ecobici program has a presence in CDMX. Furthermore, the evidence suggests that some users who migrate to bicycles permanently replace their means of transport.

Abstract The objective of this study is to evaluate the impact generated by the implementation of Metrobús Line 1 on the air quality of Mexico City. To this end, the pollutant monitoring stations are categorized into control and treatment groups according to their proximity to Line 1 of Metrobús, the first BRT line in Mexico City. Differences-in-differences estimates are employed to study the differences in contamination between the groups: i) during the six months of the construction period and ii) during the first two years of operation. Implementing Metrobus Line 1 was not an effective environmental policy to reduce NO levels in the geographic area near the line since it increased on average 17%. In contrast, the emissions of other pollutants related to the transport sector do not increase, including PM10 and PM2.5, which are the most harmful to health. The channel through which the BRT affects air quality is through its impact on vehicular congestion, so in order not to increase pollution, road policies are necessary that accompany the reduction of lanes or the establishment of traffic lights that the implementation of BRT entails.

Other exercises

(with Angel Espinoza)

Abstract The objective of this work is to dynamically analyze the effect of economic activity and unemployment on crime (homicides). The relationship between these variables has already been studied in the past. However, most of the previous studies are limited to analyzing the effect of crime on GDP. Our paper studies the inverse relationship for the Mexican case with a time series approach. We test different econometric models. Using the Davidson and MacKinnon methodology, we found that the best model was the difference-parameterized General Dynamic Model, given its explanatory capacity and dynamics of shocks. Contrary to the expected relationship between GDP and unemployment over homicides (inverse and positive, respectively), our work leads to opposite conclusions. In the first place, from our results, it is concluded that in the face of an acceleration in economic activity, not only is there no less crime, but the number of crimes (homicides) increases in the same proportion as GDP increases. The latter leads one to think that economic growth is accompanied by variables that are not considered, such as population growth or inequitable income growth (which could increase crime itself). Secondly, with our model, we can conclude that unemployment does not structurally affect the homicide rate.

Abstract A general assumption by policymakers is that electric vehicles are cleaner and more sustainable for the environment than gasoline vehicles, but is this true? Electric vehicles (EVs) have emerged as an alternative to gasoline vehicles as they are considered greener and more sustainable since they allegedly contribute to reducing polluting emissions and, thus, health damage. In this research, I take the Mexican case to compare the marginal cost of one additional electric vehicle against the air quality marginal cost of one additional gasoline vehicle. I also account for the generation plants' emissions and their local impact due to the increase in electric vehicles. This study's relevance is enhanced given that I study the most health-damaging pollutant (PM2.5) and the kind of vehicles that accounts for most emissions in Mexico City (private vehicles). I calculate that the marginal cost per person for an additional gasoline vehicle in Mexico City is 0.1322 MXN, and the marginal cost per person for an additional electric vehicle in Mexico City is 0.018 MXN. Therefore, in this research, I prove that electric vehicles have a lower marginal cost per person than gasoline vehicles. The latter holds even when accounting for pollution emitted locally due to increased activity of generation plants that respond to an increase in demand due to an additional EV in Mexico City. Hence, the popular hypothesis that EVs are more sustainable with air quality than gasoline vehicles holds for the case of Mexico City.

RICARDO GÓMEZ-CARRERA

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