Topic: Ambiguity, Nonconvex Cost and the Distribution of Investment

Speaker: WANG Xiaowen, China Institute of Economic Research, Liaoning University

Time: May 8, 2025, 14:00

Venue: EMS 206

Abstract:

This paper adapts Sargent’s version of Lucas and Prescott’s model of investment under uncertainty in a competitive industrial equilibrium setting. In this setting, individual firms incur both fixed and proportional cost and make investment decisions under model uncertainty. When we assume agents are subject to idiosyncratic demand shocks and follow an (S,s) policy, model uncertainty widens the inaction band, results in underinvestment, and generates heterogenous lumpiness at the micro level.

Guest Bio:

Wang Xiaowen is an Assistant Professor at the China Economic Research Institute of Liaoning University and previously worked at the Advanced Institute of Economics at Shanghai University of Finance and Economics. She earned her Ph.D. in Economics from The University of Hong Kong in 2017 under the supervision of Professor Yu Lei Luo. Her research focuses on macroeconomics and international economics. Her work has been published in economics journals such as Journal of Monetary Economics, Annals of Economics and Finance, and International Studies of Economics.