Research

Working papers

Demand-Side Management in Fully Electrified Homes with Øystein Hernæs and Anders Imenes. IZA Discussion Paper No. 15194. CESifo Working Paper No. 9657. (accepted at the Journal of the Association of Environmental and Resource Economists)

We report the results of a critical peak pricing (CPP) experiment conducted in anenvironment where homes are fully electriﬁed, including both room and water heating. When a CPP with day-ahead SMS announcements is applied to the afternoon peak, creating a ten-fold increase in the electricity price, electricity consumption decreases by 15.3%, virtually eliminating that peak. The largest responses come from electricvehicle (EV) households. Also, unlike households without EVs who make reductionswithout compensating later, EV households respond to the CPP by shifting load to oﬀ-peak and next-day use. In our experiment, where higher-income households are disproportionately likely to own EVs, we ﬁnd that demand reductions induced by the CPP are similar across income groups. Our results support the view that increased electriﬁcation may lead not only to a greater need for demand-side management but also enhance the ﬂexibility in how households can and are willing to respond. [Slides]

Does the Salience of Climate-Related Risk Affect Asset Prices? (Revise and resubmit at the Journal of Financial and Quantitative Analysis)

Using regression discontinuity and difference-in-discontinuities designs to compare prices of California homes across a new wildfire risk zone boundary, I identify a null local effect. In contrast, difference-in-differences panel estimates indicate that prices of homes newly assigned to a riskier zone drop by 2.5% on average. Both findings are consistent with actual wildfire risk, which is continuous at the boundary but higher on average inside a riskier zone. These findings suggest that households update their risk beliefs in response to re-zoning but do not respond to the increased salience of risk arising from the new risk zone.

Here Comes the Sun: The Effect of Sunshine on Home Prices with Andreas E. Eriksen

Using high-frequency data for the Norwegian housing market, we show that sunshine affects residential real estate prices. In particular, we find evidence that sunshine affects asset price formation primarily during the days of public showings of for-sales homes, rather than during the final bidding process. Furthermore, we find no evidence that sunshine affects buyer interest, including the number of participants at showings and the number of people making offers. These results suggest that the primary channel through which sunshine impacts households' beliefs and asset prices is during the initial information processing stage.

Work in progress

"Sticky Asset Prices'' (with Martin Schmalz and Dag Einar Sommervoll)

We investigate asset price stickiness using an unexpected, geographically confined, and long-lasting change in residential electricity prices to shock the fundamental value of a large cross section of homes. We estimate a negative effect on both prices and sales volume. The negative effect on sales volume suggests that asset prices do not drop enough but are downward-sticky, which carries potential implications for asset pricing, macro, and monetary theory. [Slides]

"From Brown to Green: Employment Dynamics and Skill Demand in a Low-Carbon Transition'' (with Elisabeth Isaksen and Maria Nareklishvili)

Using worker-firm level data, we examine the effect of the 2014 oil price shock on oil workers in Norway as they transition to new occupations, jobs, or industries. This shock led to a sudden 20% decline in employment in the oil sector, thus offering a laboratory to investigate how a contraction of the fossil-fuel sector can facilitate the green transition. We find that oil workers are no more likely to transition into green industries than other workers. Yet, we document that oil workers transitioning into green industries face a lower wage cut than those transitioning into other non-brown sectors.

"Household response to an electricity price shock" (with Elisabeth Isaksen)

Using monthly-level household electricity consumption data and a spatial regression discontinuity design, we investigate households' response to an unexpected, geographically confined, and long-lasting change in residential electricity prices.

"Aggressive Bidding in Housing Auctions" (with Andreas E. Eriksen, Plamen Nenov, and Nadav Tadelis)

Using data on more than one million bids, we characterize the occurrence of aggressive bidding in housing auctions.

Selected peer-reviewed publications

Garnache, C. and Mérel, P.R. (2022) “Environmental Policy in General Equilibrium: New Insights from a Canonical Model .” Journal of the Association of Environmental and Resource Economists, 9(1):113–140.

Reeling, C., Horan, R., and Garnache, C. (2020) “When the Levee Breaks: Can Multi‐Pollutant Markets Break the Dam on Point-Nonpoint Market Participation?” American Journal of Agricultural Economics, 102(2):625--640.

Garnache, C. and Mérel, P.R. (2017) “The Social Costs of Environmental Goods Provision: A Cautionary Guide to the Revealed-Preference Approach .” Journal of the Association of Environmental and Resource Economists, 4(4):1025--1052.

Garnache, C., Mérel, P.R., Lee, J., and Six, J. (2017) “The Social Costs of Second-Best Policies: Evidence from Agricultural GHG Mitigation.” Journal of Environmental Economics and Management, 82:39--73.

Garnache, C., Swinton, S.M., Herriges, J.H., Lupi, F., and Stevenson, R.J. (2016) “Solving the Phosphorus Pollution Puzzle: Synthesis and Directions for Future Research.” American Journal of Agricultural Economics, 98(5):1334--1359.

Garnache, C. (2015) “Fish, Farmers, and Floods: Coordinating Institutions to Optimize the Provision of Ecosystem Services.” Journal of the Association of Environmental and Resource Economists, 2(3):367--399.

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