Other Titles in the Occasional Paper Series

O C C A S I O N A L   P A P E R      

Central America: Global Integration and Regional Cooperation

Edited by Markus Rodlauer and Alfred Schipke

©2005 International Monetary Fund
July 2005

View the Video Presentation on Occasional Paper 243: English | Espaņol

Chapters below in PDF format. Ordering Information for printed version

Abbreviations and Acronyms
I.   Introduction and Overview
Markus Rodlauer and Alfred Schipke
Recent Developments
II.   Macroeconomic Implications of CAFTA-DR
M. Ayhan Kose, Alessandro Rebucci, and Alfred Schipke
Implications for Trade and Investment Flows
Implications for Economic Growth and Welfare
Could CAFTA-DR Help Reduce Poverty in the Region?
CAFTA-DR's Potential Impact on Macroeconomic Volatility and the Co-movement of Business Cycles
Appendix I. The Model
Appendix II. Volatility and Co-Movement of Macroeconomic Variables
III.   Trade Liberalization and Tax Coordination
Chiara Bronchi and Dale Chua
Structure and Trend of Tax Revenues in Central America
Estimating the Loss of Tax Revenue from CAFTA-DR
Dealing with the Revenue Impact of CAFTA-DR
CAFTA-DR and Issues of Tax Coordination
Appendix. Data and Methodology for the Calculation of Revenue Losses
IV.   Fiscal Sustainability: A Value-at-Risk Approach
Ricardo Adrogué
Analytical Issues and the Traditional Sustainability Approach
Modeling the Debt-to-GDP Ratio Using VaR
Assessment of Policy Options
Appendix. Value-at-Risk Methodology
V.   Regional Integration and Exchange Rate Arrangements
Jun Il Kim and Laura Papi
Issues Concerning Exchange Rate Regi mes in Developing Countries
Long-Run Options for Exchange Rate Regi mes in Central America
Choosing Among the Long-Run Options: Key Factors
Choosing Among the Long-Run Options: An Index Approach
Appendix. Technical Appendix
VI.   Regional Integration and Financial Systems Issues
R. Armando Morales and Alfred Schipke
Financial Sector Development and Structure
Challenges for Financial Regulation and Monitoring
Recent Progress Made and Looking Forward
VII.   Regional Issues in Macroeconomic Statistics
Lorraine Ocampos
Data Suitability for Analytical Purposes
Moving Toward a Harmonized Statistical Framework
Technical Assistance to the Region
Appendix. Statistical Issues, Suitability of Data for Analytical Purposes, and Technical Assistance Missions
VIII.   The Political Economy of Imple menting Pro-Growth and Anti-Poverty Policy Strategies in Central America
Luis Breuer and Arturo Cruz
Political Support for Pro-Growth and Anti-Poverty Strategies
Generating Consensus on a Long-Term Reform Strategy
Implications for the IMF
1.1   Regional Economic Institutions
3.1   Revenue Effects of Growth Enhancement from CAFTA-DR
3.2   Current Status of Customs Administration in Central America
5.1   The History of Exchange Rate Regimes in Central America
5.2   Regression Results
5.3   Projections for Indices of Central A merican Countries
5.4   Consolidated Claims of BIS Reporting Bank on Central American Countries
6.1   Institutions Conducting Cross-Border Financial Transactions in Central America
6.2   Panama's Financial System and Regional Offshore Center
6.3   Dominican Republic: Banking Crisis and Financial Reform
7.1   Main Data Issues in Central America
7.2   Dominican Republic: Data Issues
8.1   Institutional Aspects of Strategies to Boost Growth and Reduce Poverty
8.2   Consolidated Supervision of the Financial Sector
2.1   Tariffs in Central America, 1980–99
2.2   Selected Economic Indicators: Central A merica and Mexico, 2004
2.3   Growth of Exports and Imports
2.4   Top Eight U.S. Merchandise Imports from Central America, 2003
2.5   Top Eight U.S. Merchandise Exports to Central America, 2003
2.6   Diversification of Exports
2.7   Gross Foreign Domestic Investment Flows
2.8   Foreign Domestic Investment Inflows from the United States
2.9   Dynamics of Economic Growth
2.10   Contributions to GDP Growth
2.11   Potential Welfare Gains from International Risk Sharing
2.12   Forecast Variance Decomposition of GDP Growth
2.13   Forecast Variables Decomposition of GDP Growth (Regional Shocks)
2.A1   Volatility of Macroeconomic Aggregates
2.A2   Co-Movement of Macroeconomic Aggregates with U.S. Aggregates
3.1   Consolidated Central Government: Tax Structure for Selected Central American Countries, 2000–03
3.2   Central America: Average Collected Import Duty Rates
3.3   Customs Revenue on Imports from the United States, 2003
3.4   Schedule A Imports, 2003
3.5   Revenue Impact of CAFTA-DR, First Year
3.6   Honduras and Nicaragua: Revenue Impact of CAFTA-DR, First Year
3.7   Summary Table: Revenue Loss of CAFTA-DR
3.8   VAT Productivities
3.9   Excise Tax Summary
4.1   Results from Traditional Debt Sustainability Analysis
4.2   Main Vulnerability Measures
4.3   Projected Change in Primary Balance
4.4   Relative Contribution by Risk Factor
4.5   Effect of Increased Reliance on Domestic Currency Debt
5.1   Exchange Rate Regimes
5.2   Exchange Rate Regimes, Natural Classification
5.3   Trade Structure and Openness
5.4   Consolidated Claims of BIS Reporting Banks on Central American Countries
5.A1   Co-Movements in Output
5.A2   Source of Output Co-Movements
5.A3   Terms of Trade
5.A4   Co-Movements in the Terms of Trade
5.A5   Correlations of Terms of Trade
5.A6   Inflation Performance
5.A7   Co-Movements in Prices
5.A8   Optimum Currency Area Index: Regression Results
5.A9   Optimum Currency Area Indices for Central America and
Europe vis-à-vis Anchor Country
5.A10   Central America: Projections for the Optimum Currency Area
Indices vis-à-vis the United States
6.1   Central America: Structure and Performance of the Financial Sector, 1996–2003
6.2   Regional Banks, 2003
6.3   Prudential Requirements
6.4   Financial Sector Assessment Program
7.A1   Statistical Issues
  7.A2   Suitability of Data for Analytical Purposes
7.A3   Statistics Technical Assistance Missions, 1995–end-January 2005
8.1   Comparative Social Indicators
8.2   Comparative Governance Indicators
1.1   Central America: Real GDP Per Capita Growth
1.2   Poverty and Extre me Poverty in Central America
2.1   Trade Openness
2.2   Trade with the United States
2.3   Exports to the United States
2.4   Imports from the United States
2.5   Growth Rate and Volatility of Macroeconomic Aggregates in Mexico and Central America
2.6   Impulse Responses of GDP
2.7   Co-movement of Economic Variables in Mexico and the United States
2.8   Co-movement of Economic Variables in CAFTA-DR Countries and the United States (Average Correlation)
2.9   Impulse Responses
2.A1   Production Structure of the CAFTA-DR Model
3.1   Tax Revenue, 1990–2003
3.2   Central America: Composition of Tax Revenue, 1990–2003 n percent of GDP)
3.3   Composition of Tax Revenue, 1990–2003 (In percent of tax revenue)
3.4   Estimated Minimum VAT Rate to Compensate for Tariff Loss, 2003
4.1   Distribution of the Public Ratio of Debt to GDP in 2008
5.1   Nominal Exchange Rate Variability, 1984–2003
5.2   Optimum Currency Area Indices, 1984–2003
5.3   Comparison of OCA Indices vis-à-vis the United States,
5.4   Central America and Europe: Optimum Currency Area Indices
6.1   Central America: Public Debt, 1990–2003
6.2   Central America: Financial Sector Development
6.3   Banking Sector Dollarization, 2003
6.4   Organizational Structure of Cuscatlán