Publications
Privatization in the Natural Gas Sector: A General Equilibrium Analysis Latin American Economic Review, 2023.
Joint with Bruno R. Delalibera and Guilherme Zimmerman
[ Abstract ]
A broad literature highlights efficiency gains due to cost reduction after privatizations in the energy sector. However, to the best of our knowledge, this literature does not develop general equilibrium models, which are fundamental to account for post-privatization gains from a regional perspective. This paper evaluates the increase in efficiency necessary to make the privatization of a natural gas local distribution company (LDC) worthwhile in a state-level fiscal sense. We propose a general equilibrium model representing a regional economy supplied by a monopolistic LDC, whose ownership is shared between the private sector and federal and state governments and calibrate it for 13 of the major Brazilian LDCs. We find that the necessary unit cost reduction varies substantially across LDCs and depends on the level of underpricing when the asset is sold. The necessary unitary cost reductions range from 1.6\% to 64\% when we consider the median level of underpricing found in the literature.
Reforms in the Natural Gas Sector and Economic Development Economic Modelling, 2023.
Joint with Bruno R. Delalibera and Guilherme Zimmerman
[ Abstract ]
This paper investigates the short- and long-term effects of increased competition in the provision of natural gas. We build a dynamic general equilibrium model with monopolistic distribution of natural gas and calibrate it to 12 major Brazilian local distribution companies. We find that reductions in the price of natural gas can lead to sustained and significant increases of natural gas in the energy mix. A 5% reduction in the price of natural gas leads to a median increase in the consumption of natural gas of 5.5%, with moderate GDP gains between 0.03% and 0.16%. Our model not only highlights the mechanisms for energy transitions but also shows that moderate declines in natural gas prices can lead to sustained long-term increases in the share of natural gas consumption.
The Aggregate Productivity Slowdown: A System Approach Economics Letters, 2023.
[ Abstract ]
I revisit the productivity slowdown debate by estimating the capital-labor elasticity and the bias of technical change for the U.S. economy under four different models of technical change. One with constant growth rates, one with a structural break in the constant growth rates, one in which growth is linear, and one with flexible time-varying growth rates. I find evidence in support of non-constant growth rates of factor-augmenting technical change. Labor-augmenting technical change growth rates are decelerating, while capital-augmenting technical change is non negligible but vanishes quickly.
Working Papers
Capital Misallocation and Economic Development in a Dynamic Open Economy
Joint with Bruno R. Delalibera, Luciene Pereira, and Heron Rios
[ Abstract ]
Some countries, such as Canada, Italy, and Mexico, have experienced a higher growth rate of capital per worker but a lower growth rate for GDP per worker compared to the United States. This paper explains these two facts through the lens of a dynamic multisector open economy model where capital flows across countries. In the model, firms face sector-specific distortions on capital and intermediate inputs that influence the actual rate of return on capital and the aggregate total factor productivity (TFP). We calibrate the model to Mexico for the period 2000-2014 and show that changes in sectoral distortions and productivities reduced the actual rate of return on capital, triggering capital accumulation and a reduction in TFP. The results show that aggregate output decreased by 7.3\% and aggregate capital increased by 10.6\%. From 33 sectors (out of 48) that suffered productivity losses, approximately 50\% accumulated more capital. Furthermore, the capital-intensive sectors explain 82\% of the capital-output ratio increase.
Structural transformation in India: The Role of the Service Sector
[ Abstract ]
Contrary to the experience of industrialized countries, productivity growth of Indian services has been consistently faster than manufacturing. In this paper, I document that (i) the fastest growing industries in services grow faster than in manufacturing; (ii) faster productivity growth in services than in manufacturing is not because of sluggish manufacturing productivity; (iii) the supply of skilled workers in India is skewed towards tertiary education and (iv) the service sector is the most skill intensive; (v) returns to schooling are larger for the high-productivity services. To quantify and rationalize these facts, I construct a multi-sector model of structural change with high and low-skilled workers. The calibrated model suggests that the large supply of high-skill workers combined with higher skill intensity in the service sector seem to be behind the services take-off. The data imply that service sub-sectors are gross substitutes while manufacturing sub-sectors are gross complements. This will accelerate productivity growth in services and decelerate productivity growth in manufacturing.
The Economic Linkages of Covid-19 Across Sectors and Regions in the UK (R&R SERIEs)
Joint with Fidel Pérez-Sebastián
[ Abstract ]
This paper builds a spatial model of trade with supply-chain links to try to understand the effect of economic links and policies on the spread of the Covid-19 pandemic during the first wave across NUTS2 UK regions. We find that the fight to reduce infection rates was more successful in the UK than in the European Union. Our results imply that without the policy reaction in Europe, the number of deaths during the first wave of the pandemic would have been about 4,400,000 larger in the European Union and about 1,217,000 higher in the UK, and that these benefits vary greatly across UK regions. Comparing the effects of the policies implemented in the EU27 and in the UK, we estimate that, in the absence of European-Union’s anti-Covid-19 measures, the number of deaths in the UK would have been an 80% larger; and that UK anti-Covid-19 measures saved about 50,000 lives in the European Union and 1,200,000 lives in the UK.
Spatial Misallocation of Complementary Infrastructure Investment: Evidence from Brazil
Joint with Fidel Pérez-Sebastián and Jevgenijs Steinbuks
[ Abstract ]
How is the spatial development of economic activity affected by the misallocation of complementary public capital? To answer this question, we model jointly the endogenous evolution of transport and electricity networks in a multi-sector quantitative spatial general-equilibrium model where sectoral productivities are affected by the quality of both infrastructure types. Simulation results for the Brazilian economy point to large welfare gains from reallocating infrastructure investment. Spatial and fiscal complementarities in heterogeneous infrastructure provision determine a sizeable part of the those gains. Spatial misallocation of both infrastructure investments is positively associated with local political support for the incumbent authority.
