Economic Impacts of the Expansion of Renewable Energy: The Experience at the County and National Level

This dissertation examines the impact of the expansion of renewable technology at both national and local level, through distinct essays. At the national level, the first paper analyzes the effects of economic and distributional impacts of climate mitigation policy, in the context of a developing country, to understand the interactions between the energy system and the macroeconomic environment. In the case of the local level, the second paper uses synthetic control method, to estimate the effect at the county level of utility scale wind in the development indicators for two counties in the U.S. The first paper assesses the economic and distributional impacts of Nicaragua’s commitments to limit future greenhouse gas emissions in the context of the Paris Agreement, known as the Nationally Determined Contributions (NDCs). The analysis relies on two distinct models. The first is a top-down approach based on a single-country computable general equilibrium (CGE) model, known as the Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE) Model. The second is a bottom-up approach based on the OpenSource energy Modeling System (OSeMOSYS), which is technology rich energy model. The combined model is calibrated to an updated social accounting matrix for Nicaragua, which disaggregates households into 20 representative types: 10 rural and 10 urban households. For the household disaggregation we have used information from the 2014 Living Standards Measurement Study (LSMS) for Nicaragua. Our analysis focuses on the distributional impacts of meeting the NDCs as well as additional scenarios—in a dynamic framework as the MANAGE model is a (recursive) dynamic model. The results show that a carbon tax has greatest potential for reduction in emissions, with modest impact in macro variables. An expansion of the renewable sources in the electricity matrix also leads to significant reduction in emissions. Only a carbon tax achieves a reduction in emissions consistent with keeping global warming below 2°C. Nicaragua’s NDC alone would not achieve the target and mitigation instruments are needed. An expansion of generation from renewable sources, does not lead to a scenario consistent with a 2°C pathway. The second paper measures the impact of wind generation on county level outcomes through the use of the Synthetic Control Method (SCM). SCM avoids the pitfalls of other methods such as input-output models and project level case studies that do not provide county level estimates. We find that the local per capita income effect of utility wind scale is 6 percent (translate into an increase of $1,511 in per capita income for 2019) for Benton County and 8 percent for White county in Indiana (an increase of$2,100 in per capita income for 2019). The per capita income effect measures the average impact, which includes the gains in rents from capital, land, and labor from wind power in these counties. Moreover, we find that most of the rents from wind power accrue to the owners of capital and labor. Even assuming the lowest projections of electricity prices and the highest reasonable cost we still find a 10 percent minimum rate of return to capital for both Benton and White counties’ wind power generators. Furthermore, we find that there are excess rents that could be taxed and redistributed at the county, state, or federal level without disincentivizing investment in wind power

Does Covid-19 make consumers discriminate Chinese products? – Evidence from Amazon

Covid-19 has tremendously affected all areas of our lives and our online shopping choices have not been immune. Country of origin (COO) is an important characteristic used by global marketers to influence customer decisions (Agrawal and Kamakura, 1999), with the COO being used by the consumers to make “quality judgments of a product”. Even though there is no valid reason to avoid Chinese products, our research shows that a significant number of consumers around the world now try to avoid buying products manufactured in China and that there has been a rise in discriminatory online review ratings for Chinese products, especially with regards to personal protective equipment (PPE), specifically facemasks. According to WHO, the spread of Covid-19 through international products is extremely unlikely. However, given that China was the first country to report cases of Covid-19, it has led many to associate Covid-19 and China. To make matters worse, there have been prominent political leaders that have used language to stigmatize China with blame and fear around Covid-19. Such language stigmatizes Chinese products with unfounded health concerns and encourages unfair discrimination based on false blame and unwarranted distrust. Discrimination against Chinese products could result in significant shifts in trade patterns, especially in the United States where China is the largest importer of goods. In 2019, China exports to the United States totaled $451.7 billion. To study this question, we compiled data from Amazon on all facemask products sold on the site between September 10th and 24th, including the seller, review rating, sales data, price, product features, and every review. We find that facemasks manufactured in China are generally priced lower than facemasks made in the United States even with practically identical products

Nicaragua’s Climate Mitigation Policy: Sectoral and Inter-Household Effects

The objective of this paper is to develop a CGE model for a developing country that disaggregates households and studies the impact of Nationally Determined Contributions (NDC) commitments. The model disaggregates the representative household into 20 representative households, 10 rural and 10 urban households. For the household disaggregation we have used the information from the Living Standards Measurement Study (LSMS) 2014 for Nicaragua. The households disaggregation allows to study the impact of achieving the NDC commitments for the country; and determine which households are expected to win and which households. Since Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE) model is a dynamic model we also model the evolution of the households to these shocks

Nicaragua’s Climate Mitigation Policy: Sectoral and Inter-Household Effects

The objective of this paper is to develop a CGE model for a developing country that disaggregates households and studies the impact of Nationally Determined Contributions (NDC) commitments. The model disaggregates the representative household into 20 representative households, 10 rural and 10 urban households. For the household disaggregation we have used the information from the Living Standards Measurement Study (LSMS) 2014 for Nicaragua. The households disaggregation allows to study the impact of achieving the NDC commitments for the country; and determine which households are expected to win and which households. Since Mitigation, Adaptation and New Technologies Applied General Equilibrium (MANAGE) model is a dynamic model we also model the evolution of the households to these shocks