Seminario de Investigación ECOBAS: Diego Puga (Centro de Estudios Monetarios y Financieros)

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Abstract: We develop an urban growth model where human capital spillovers foster entrepreneurship and learning in heterogeneous cities. Incumbent residents limit city expansion through planning regulations so that commuting and housing costs do not outweigh productivity gains. The model builds on strong microfoundations, matches key regularities at the city and economy-wide levels, and generates novel predictions for which we provide evidence. It can be quantified relying on few parameters, provides a basis to estimate the main ones, and remains transparent regarding its mechanisms. We examine various counterfactuals to assess the effect of cities on economic growth and aggregate income quantitatively.

Seminario de Investigación ECOBAS: Brais Álvarez Pereira - UNova (Lisboa)

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Does lack of information reduce the ability of producers to find the right time to sell their products? To answer this question, we ran a two-level cluster randomized control trial among 1988 cashew producers in 290 villages in Guinea-Bissau. Treated producers received weekly messages to their mobiles during the trading season in 2020. The messages provided up-to-date market news, farmgate prices, and gave marketing advice. We found that treated producers sold their cashews more frequently relative to the producers in other experimental groups, who tend to sell their cashews in a single transaction. Treated producers failed to earn higher prices, but earned more from all sales and barters, relative to the control group mean. We explore several mechanisms to understand our results. We found no evidence suggesting that treated producers changed their buyers, the location of their sales, had more bargaining power, better record keeping, or different attitudes towards risk. Given the low cost of our intervention, market information can be a cost-effective tool to increase producers’ revenues.

Seminario de Investigación ECOBAS: Javier López Prol - Yonsei University (Corea do Sur)

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Opposite to traditional dispatchable technologies, wind and solar have a variable generation pattern. Due to the particular characteristics of electricity markets, this variability poses challenges to their integration, such as the cannibalization effect (decline of their market value as penetration increases), and curtailment. I will review these problems by presenting their quantification for California, and discuss some of the potential solutions, focusing on the potential benefits of spatial integration and deployment coordination of renewable resources across countries.

Seminario de Investigación ECOBAS: Joana Rita Pinho Resende - Universidade do Porto (Portugal)

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We consider a non-durable good monopolist that collects data on its customers in order to profile them and subsequently practice price discrimination on returning customers. The monopolist's price discrimination scheme is leaky, in the sense that an endogenous fraction of consumers may choose to incur a privacy cost to conceal their identity in future purchases. We characterize the Markov Perfect Equilibrium of the dynamic game under two alternative customer profiling regimes: full information acquisition (FIA) and Purchase History Information (PHI). In both cases, we find that, contrary to what could have been expected, the aggregate profit is not monotonically increasing in the level of the privacy cost but a U-shaped function of it, leading to ambiguous profit effects: A reduction in privacy costs increase the fraction of customers who choose to be anonymous (detrimental profit effect) but it also softens the firm's introductory price, reducing the pace at which prices targeted to new customers fall over time (positive profit effect). When comparing results under FIA and PHI, we find that market expansion is faster and more customers conceal their identity under FIA than under PHI. Equilibrium profits are also higher in the FIA case. Although equilibrium profits are U-shaped functions of the privacy cost in both profiling regimes, they tend to be globally decreasing under PHI, while being globally increasing with the privacy cost under FIA.

Seminario de Investigación ECOBAS: Javier Ojea - Joint Research Centre of the European Commission (JRC-EC)

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RESUMO: Transitioning to a low-carbon economy involves risks for the value of financial assets, with potential ramifications for financial stability. We quantify the systemic impact on financial firms arising from changes in the value of financial assets under three climate transition scenarios that reflect different levels of vulnerability to the transition to a low-carbon economy, namely, orderly transition, disorderly transition, and no transition (hot house world). We describe three systemic risk metrics computed from a copula-based model of dependence between financial firm returns and financial asset market returns: climate transition expected returns, climate transition value-at-risk, and climate transition expected shortfall. Empirical evidence for European financial firms over the period 2013-2020 indicates that the climate transition risk varies across sectors and countries, with banks and real estate firms experiencing the highest and lowest systemic impacts from a disorderly transition, respectively. We find that default premium, yield slope and inflation are the main drivers of climate transition risk, and that, in terms of capital shortfall, the cost of rescuing more risk-exposed financial firms from climate transition losses is relatively manageable. Simulation of climate risks over a five-year period shows that disorderly transition can be expected to imply significant costs for banks, while financial services and real estate firms remain more sheltered.

Seminario de Investigación ECOBAS: Mar Reguant - Northwestern University (Ilinois) & Barcelona School of Economics


We study the distributional impacts of real-time pricing (RTP) in the Spanish electricity market, which rolled out RTP as the default tariff for a large share of residential customers. We complement aggregate patterns of distributional effects with a method to infer individual households' income using zip-code income distributions. We identify three channels for the distributional impacts of RTP: consumption patterns, appliance ownership, and location. The first channel makes the switch from monthly to hourly prices progressive since high-income households consume disproportionately more at peak times when real-time prices are higher. However, the other two channels make the switch from annual to monthly prices regressive: low-income households, who tend to have more electric heating, benefit from the price insurance provided by time-invariant prices during winter, when prices tend to be higher and more volatile. Given that prices differences are greater across months than within months, the regressive effect dominated. Using counterfactual experiments, we find that RTP makes low-income households particularly vulnerable to adverse weather shocks during winter. In the future, the wider adoption of enabling technologies (including storage and demand response devices) by the high-income groups might worsen the distributional impacts of RTP.