Estimating the Economic Impacts of Power Supply Interruptions

(2019) Energy Economics, v.80, May 2019, pp.983-994

The cost of power system rationing, which is a crucial parameter for determining optimal resilience investments, is usually estimated using reduced-form linear models or ordinary input-output analysis. However, such methods do not properly address either consumers' rational reactions to rationing policy or policy design nonlinearities. To solve this problem, this paper estimates the effects of power system rationing using a general equilibrium model. The model solution shows that the power cut distribution among industries is a critical variable for quantifying policy effects and provides insights into optimal policy design.

Saving more than R$ 85 billion of Brazilian Social Security System: The case of PRBI

(2020) Brazilian Journal of Public Administration, v.54, n.6, pp.1729-1746, with Raquel Freitas and Alberto Beltrame

Since 2016, the number of recipients of incapacity allowance in Brazil has been continuously falling. This article presents the program of incapacity benefits assessment (PRBI) to help understand the dynamics around incapacity allowance and similar benefits. The study shows that the PRBI can save more than R$ 85 billion of the budget allocated to social security in the country.

Working Papers

[Job Market Paper] Optimal Subsidies in Capacity-Constrained Essential Services

Policymakers often provide essential goods such as education, healthcare, and childcare for free to make them more accessible. Yet setting prices at zero can push demand beyond public capacity, so some consumers end up rationed out and must either turn to private providers or go without these services. We study this trade-off in the Brazilian higher education market, where private institutions compete with high-quality, free, and capacity-constrained public colleges. Using a structural supply and demand model, we show that free college reduces overall enrollment and lowers enrollment among poor students once its effects on admission cutoffs are taken into account, despite substantial and well-targeted affirmative action quotas. Simulations indicate that the budget-neutral mix of subsidies that maximizes higher education enrollment sets public tuition at BRL 100—approximately the average per capita income of students in the lowest socioeconomic quintile—and provides an unconditional BRL 22.73 scholarship. Under this policy, students attending public schools pay BRL 77.27 and students attending private schools receive BRL 22.73 (in addition to paying private tuition). This reform would increase total enrollment by 1.1%, narrow the enrollment gap between the poor and non-poor students by 0.8 p.p., and raise consumer surplus by 0.4% of baseline prices, even though average market prices rise by 9.8%.

The Insurance Role of Public Employment

with Anna dos Reis and Eduardo Zilberman

A public job can be a source of insurance against income risk.  Indeed, many public employees have job stability, which is compounded  with less volatile and more compressed wages.  Hence, by increasing its number of employees, the government improves the degree of insurance in the economy. In order to quantify this source of insurance, we introduce public employment in an incomplete markets model.  In a model economy calibrated to Brazil, if the share of public workers reduces from 13.5 to 10 percent, social welfare increases but losses due to the worse degree of insurance are of 1 to 2 percent.