This paper provides stark evidence of hysteresis—the failure of an effect to reverse itself as its underlying cause is reversed—in energy demand. We estimate that half of the 23% reduction in residential electricity use caused by a 9-month-long policy that was imposed on millions of Brazilians has persisted for at least 12 years. We examine the implications of our finding by extending the traditional welfare analysis of corrective policies to allow for hysteresis. Our estimate highlights that failing to take hysteresis into account could severely bias the welfare evaluation of policies aimed at reducing (long-run) energy demand.

This paper estimates the Brazilian Amazon’s carbon-efficient forest cover—i.e. when farmers internalize the social cost of carbon. We propose a dynamic discrete choice land-use model and estimate it using a panel of land use and carbon stock of 5.7 billion pixels between 2008 and 2017. The business-as-usual scenario implies an inefficient release of 42 billion tons of CO2 in the long run, resulting from the deforestation of an area twice the size of France. A carbon tax that makes farmers internalize the social cost of carbon would implement the efficient allocation and generate welfare gains exceeding 1.6 trillion dollars. Responses from a carbon tax are highly convex: a carbon tax of only $10/ton would preserve 95% of the efficient carbon stock. An excise tax on cattle ranching, a second-best policy, achieves at most 87% of the first-best welfare gains.

This paper exploits location choices of all generalist physicians who graduated in Brazil between 2001 and 2013 to study policies aimed at increasing the supply of physicians in underserved areas. We set up and estimate a supply and demand model for physicians. We estimate physicians' locational preferences using a random coefficients discrete choice model. The demand has private establishments competing for physicians with private and public facilities around the country. Policy counterfactuals indicate that quotas in medical schools for students born in underserved areas and the opening of vacancies in medical schools in deprived areas are more cost-effective than financial incentives.