Zoulfikar Mehoumoud Issop (p), Yves Croissant, Philippe Randriamasimanjato

Tainá Pacheco

This article analyzes the economic impact of income transfers in the French Overseas Departments and Regions (DROMs), comparing them to mainland France. Using a Social Accounting Matrix that disaggregates
households into five income quintiles, the study assesses how an income
injection propagates through economies characterized by high import
dependency and deep inequalities.

The findings reveal two main conclusions. First, social transfers
targeting the poorest households (quintile 1) are the most effective
lever for stimulating local production. This is explained by their high
propensity to consume local goods and services, which limits economic
leakages to savings and imports.

Secondly, the study highlights a fundamental paradox: a powerful
``trickle-up'' effect. The spending by the poor, while boosting economic
activity, generates capital and wage income that is overwhelmingly
captured by the wealthiest households (quintile 5). In some DROMs, one
euro transferred to the poorest quintile ultimately generates more than
one euro of additional income for the richest. The article concludes
that while transfers are an effective short-term remedy, they cannot
correct structural inequalities without complementary policies aimed at
a better distribution of value added.

Tainá Pacheco (p)

Gerson Javier Perez Valbuena

Urban policies influence the balance between agglomeration benefits and congestion costs, shaping how cities develop. Land use regulations can encourage density, fostering economic and social interactions, while transportation policies affect whether congestion offsets these benefits. Higher density has been associated with various outcomes, including productivity, wages, crime, travel speed, pollution, and overall well-being. At the same time, congestion leads to negative externalities such as employment losses, reduced productivity, environmental degradation, and road safety concerns.
This paper examines whether land use and parking regulations can reshape a city's structure without worsening congestion. In 2014, São Paulo introduced a Transit-Oriented Development (TOD) policy, which allowed higher density around high-capacity transit networks while limiting on-site parking requirements. Previously, developments were required to include at least one parking space per housing unit or per 35 square meters of commercial space. The reform enabled developers to build at greater densities without mandatory parking, with Floor-to-Area Ratios (FAR) reaching up to 4.0 near transit hubs, compared to a citywide limit of 2.0.
Prior research has shown that developers responded to the reform with a short-term increase in applications for multi-family construction permits in areas where higher densities were permitted (Anagol et al., 2023). In the medium term, an increase in housing availability (1.9%) and a reduction in house prices (0.5%) were observed in neighborhoods where densification was allowed. However, it remains unclear whether the increase in construction translated into greater population density. Additionally, the welfare gains estimated by the authors depend on the magnitude of congestion effects.
Using the same identification strategy and policy shock as Anagol et al. (2023), this paper examines whether TOD and zoning reforms successfully attracted more residents to areas with greater public transit access, increasing population density without raising congestion costs. The findings will contribute to discussions on the effectiveness of land use policies in managing urban expansion. Policymakers may draw insights into whether TOD initiatives can achieve sustainable growth while avoiding unintended congestion effects. Additionally, this research may inform future regulatory designs that seek to balance density incentives with transportation infrastructure capacity.

Gerson Javier Perez Valbuena (p), Alejandro Ome , Laura Giles, Cristhian Larrahondo

Luiz Carlos de Santana Ribeiro

Natural resource funds (NRFs) are special-purpose investment funds that have become increasingly important fiscal and public asset management tools in resource dependent countries. They are generally used for fiscal and macroeconomic stabilization, as well as savings and investment. This study seeks to analyze municipal governments that participated in the Colombian Savings and Price Stabilization Fund (FAEP in Spanish). The fund was created to smooth out the effect of oil revenue on national and subnational expenditure. Interestingly, between 1995 and 2012, subnational municipal governments (SG) that were eligible for the FAEP were not only oil producing ones, but also those municipalities through which oil was exported. This study provides valid comparison groups, both with and without the presence of natural resources and for SGs with oil resources, those with and without an NRF. Specifically, it studies the FAEPs effectiveness in smoothing the effect of oil revenues on subnational public finances and on whether fiscal performance improved or worsened with the presence of royalties and then the FAEP. Data on the FAEP is obtained from two sources: (1) the Central Bank, which holds records of the contributions and withdrawals for each municipality between 1996-2003; and (2) the National Hydrocarbons Agency, as starting in 2004 the administration of the FAEP was transferred to this agency. To analyze the impact of FAEP on fiscal indicators, we use an instrumental variable approach since royalties might be endogenous to our outcomes of interest. The endogeneity problem of using royalties is solved by instrumenting royalties with the product between the international price of oil and oil production before the period of analysis, where port municipalities do not contribute to the regression, so identification of the impact of FAEP is based only on the relatively few FAEP oil producing municipalities. We address this by imputing the oil producing-equivalent of what port municipalities would need to produce to receive the royalties they receive. Since FAEP was a forced mechanism to save windfalls coming from the oil exploitation to be able to be spent during future downturns, the results we are expecting are the reductions in social investments and in the gross capital formation in FAEP municipalities when compared with non-FAEP (royalties-recipient) municipalities. I order to have a clearer view of the effects we will be able to decompose total investment (social and gross capital formation) by sector (14 sectors in total). Heterogeneous effects and robustness checks will be performed.

Luiz Carlos de Santana Ribeiro, José Ricardo de Santana (p)

Mauricio Oyarzo

Oil and gas (O&G) production in Brazil has its origins in the state of Sergipe, located in the country's Northeast region. The state's production began in 1963 in the municipality of Carmópolis, which also hosted Brazil’s first offshore production. O&G exploration has become one of the main drivers of economic development in Sergipe, with Petrobras playing a central role in generating income and employment in the state's economy. Recently, Petrobras has restructured its operations in the region, selling onshore exploration assets. In the offshore segment, the company announced a divestment plan for shallow-water fields, with projected investments of USD 2.0 billion, alongside the commencement of deepwater exploration, with expected investments of USD 5.0 billion.
This study aims to conduct a systemic and temporal assessment of Sergipe’s O&G sector. To this end, input-output indicators and methods will be employed, based on two compatible interregional matrices for the years 2011 and 2018. These matrices comprise 67 sectors and two regions: Sergipe and the rest of Brazil. This study provides a novel contribution by using these matrices in a comparative framework, enabling the identification of the O&G sector’s role within Sergipe’s production chain and assessing whether significant structural changes have occurred over the period analyzed. The findings are expected to inform sectoral policies by identifying intersectoral characteristics and specificities of Sergipe’s O&G sector, thereby enhancing public and private investment strategies in light of the state’s evolving economic landscape.

Mauricio Oyarzo (p), Dusan Paredes, Sebastián Cuellar

Zoulfikar Mehoumoud Issop

The mining industry plays a crucial role in extractive economies by providing essential resources for economic development. However, mining activities often generate concerns about their environmental impacts and social implications for local communities. In order to ensure the long-term stability of mining, it is essential to strike a balance between supporting the sustainable development of mining activities and fostering a positive impact on the local quality of life. We assess the extent to which mining windfalls generate welfare gains by optimizing the current compensation mechanism scheme to distribute windfalls among municipalities through a quantitative spatial economic model that incorporates environmental consequences due to mining activity. By integrating environmental externalities and additional revenues into a calibrated spatial economic model, our results will provide a novel explanation for studying the poor performance of mining windfall compensation for negative externalities and potential welfare gains if an optimal design were implemented.