Hannah Rhodenhiser

Abstract. Payments for Ecosystem Services are a tool for reducing carbon emissions from deforestation by paying households to conserve forest. Empirical evaluations have found small-scale subsidy interventions to have a large impact on deforestation. However, little is known about the general equilibrium effect of implementing these policies at a larger scale. I develop a tractable model of smallholders with dynamic incentives for land use to study the general equilibrium impact of at-scale forest subsidies. The quantified model implies that an at-scale intervention has only one-sixth of the impact on the level of forest of an otherwise-identical local intervention. This is because the intervention increases the equilibrium price of wood products, increasing households' incentive to deforest. However, the duration of subsidy payments is a crucial determinant of their cost-effectiveness: Comparing long-term and short-term interventions with the same total cost, long-term interventions can more than double the increase in the level of forest. Next, at scale, equilibrium forces make more households marginal to the subsidy and reduce the cost-effective degree of targeting. Finally, at-scale interventions are more progressive than local interventions because equilibrium price changes favor households with low land productivity.

Abstract. Household energy use accounts for approximately one third of U.S. emissions. Guided by a new survey, we develop a quantitative model in which households differ in income and their desire to reduce their emissions. Our analysis of cost-minimizing subsidies for clean equipment, such as electric vehicles and heat pumps, and residential solar yields three insights. First, solar receives the highest subsidy rate and accounts for over one third of abatement, reflecting its complementarities with clean equipment. Second, restricting subsidy eligibility to lower-income households generates only small cost savings. Third, without environmental preferences, household emissions would be over 15 percent higher.

Abstract. We provide a parsimonious setup for forecasting U.S. GDP growth and the unemployment rate based on a few fundamental drivers. This setup yields forecasts that are reasonably accurate compared with private-sector and Federal Reserve forecasts over the 1984–2019 and post–COVID-19 pandemic periods. This result is achieved by jointly estimating the processes for GDP growth and the unemployment rate, with the constraint that GDP and unemployment follow Okun’s law in first differences. This setup can be easily extended to replace the variables in the information set with factors that might better capture the underlying fundamentals.

Abstract. While the Panel Study of Income Dynamics (PSID) has much to offer researchers studying household behavior, one limitation is that its summary measure of wealth is not as broad as those of other commonly used surveys, such as the Survey of Consumer Finances (SCF), because it does not include the value of defined-contribution (DC) pensions. This paper describes the pension data available in the PSID and shows how they can be used to create a more comprehensive picture of household finances. We then compare various measures derived from these data with their counterparts from the SCF. Along a number of dimensions, the PSID data line up fairly well. Notably, an augmented summary measure of PSID wealth that includes the value of DC pensions is considerably closer to the SCF summary measure than to the standard measure for the median household. We conclude by presenting several examples of research areas where using a broader measure of wealth might be important.