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Abstract: This paper contributes to the literature that analyses the determinants and measurement of Technological Capabilities (TCs) with empirical evidence on Argentina, Brazil and Chile. Based on the World Bank''s Investment Climate database, the study covers firms from the manufacturing sector. We first construct a Capability Score to provide a preliminary measure of Technological Capabilities at the firm level. We then test it econometrically to explore the determinants of TCs and exports and evaluate their reciprocal relationship through a Two Stage Probit. Our results show that exports and TCs significantly and positively influence each other in some of these countries. [Copyright &y& Elsevier]

Currency substitution represents a shift from domestic currency to foreign currency and is often related to times of high and variable inflation. In this paper, we investigate the extent of currency substitution in Argentina, Brazil and Mexico using a vector error correction (VEC) model. We empirically test this hypothesis by introducing artificial shocks to the system of equations and find that M1 response to a one standard deviation increase in that country’s interest rate is negative and significant for Argentina and Brazil but not for Mexico. An artificially introduced one standard deviation increase in nominal exchange rate results in a statistically significant increase in M1 in Argentina and Brazil but again not for Mexico. Based on the patterns of the impulse response functions (IRFs) and the magnitude of the coefficients, we conclude that currency substitution occurs to a greater extent in Argentina and Brazil than Mexico. This is reflective of the implementation of relatively more credible macroeconomic policies in Mexico after the December 1994 crisis. Thus from a policymaking perspective, it is important to consider that the greater the degree of currency substitution, the more sensitive a country’s monetary aggregates are to sudden movements in exchange rates, productivity and interest rates. [Copyright &y& Elsevier]