Francisco Costa

Assistant Professor of Economics at Fundação Getulio Vargas (FGV EPGE) 

Research interests: Environmental/Energy Economics, Development Economics.

francisco.costa [at]
(+55) (21) 3799-5871
Praia de Botafogo, 190/1100, 
Rio de Janeiro, RJ, 22250-900, Brazil.


Homicides and the Age of Criminal Responsibility: A Density Discontinuity Approach, with João de Faria, Felipe Iachan and Bárbara Caballero. [replication files] [Coverage: Época OnlinePortal BrasilExame.comTerraJornal do BrasilEBCTrubuna da BahiaIGO PovoEconomìa, the journal of LACEA, forthcoming.
A growing body of evidence documents that policies can affect household behaviors persistently, even if they are no longer in place. This paper studies the importance of such ``hysteresis'' -- the failure of an effect to reverse itself as its underlying cause is reversed -- for the welfare evaluation of corrective policies. First, we introduce hysteresis into the textbook framework used to derive canonical sufficient statistics formulas for the welfare effect of corrective policies. We then derive new formulas allowing for hysteresis. We show that, under certain conditions, the persistent effect of a short-run (i.e., temporary) policy becomes a new key statistic for evaluating the welfare effect of such a policy, and also of a long-run (i.e., permanent) version of a similar policy. Second, we estimate the persistent effect of a short-run policy, for which we argue that these conditions are met, in a policy-relevant context: residential electricity use in a developing country setting. We estimate that about half of the dramatic short-run reductions in residential electricity use induced by a 9-month-long policy that was imposed on millions of Brazilian households in 2001 persisted for at least 12 years after the policy ended. Finally, we combine our estimates with our framework to illustrate the implications that hysteresis can have for the welfare evaluation of corrective policies. 

Preserving wilderness ecosystems in developing countries is challenging because their remote location places them far from state control. We investigate this using 30x30 meter satellite data to determine how Amazonian deforestation changes discretely at the Brazilian international border. In 2000, Brazilian pixels were 30 percent more likely to be deforested, and between 2001 and 2005 annual Brazilian deforestation was more than 3 times the rate observed across the border. In 2006, just after Brazil introduces policies to reduce illegal deforestation, these differences disappear. These results demonstrate the power of the state to affect whether wilderness ecosystems are conserved or exploited.

Local Economic Impacts of Brazilian Hydroelectric Power Plants, with Juliano Assunção and Dimitri Szerman[web appendix]
This paper estimates the short- and medium-run effects of the construction of large hydroelectric power plants (HPPs) on the economic development of Brazilian municipalities. We use the synthetic control method to perform one case study for each of the 82 municipalities affected by an HPP between 2002 and 2011. Three main findings emerge. First, the median impact of the construction of HPPs on the local economy follows an inverted U-shape over a five-year horizon (the average construction time is four years). Second, the median impact of the construction in the medium-run is positive but modest, with no effect on the composition of local economic activity. Third, the estimated effects display a lot of dispersion. These results do not provide support for the view that large construction works unequivocally spur local development.