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Farshad Hagh-Panah

Student Seminar #6: The Impact of Uncertainty Shocks

DateTimePresenterLocation
Monday, April 22, 2019

(02 Ordibehesht 1398)

12:30 – 13:30Mohammad SadeghiKhatam University (@ 17 Daneshvar), 7th Floor, Seminar Room

“Uncertainty appears to jump up after major shocks like the Cuban Missile crisis, the assassination of JFK, the OPEC I oil‐price shock, and the 9/11 terrorist attacks. This paper offers a structural framework to analyze the impact of these uncertainty shocks. I build a model with a time‐varying second moment, which is numerically solved and estimated using firm‐level data. The parameterized model is then used to simulate a macro uncertainty shock, which produces a rapid drop and rebound in aggregate output and employment. This occurs because higher uncertainty causes firms to temporarily pause their investment and hiring. Productivity growth also falls because this pause in activity freezes reallocation across units. In the medium term the increased volatility from the shock induces an overshoot in output, employment, and productivity. Thus, uncertainty shocks generate short sharp recessions and recoveries. This simulated impact of an uncertainty shock is compared to vector autoregression estimations on actual data, showing a good match in both magnitude and timing. The paper also jointly estimates labor and capital adjustment costs (both convex and nonconvex). Ignoring capital adjustment costs is shown to lead to substantial bias, while ignoring labor adjustment costs does not.”

Required Reading(s)The Impact of Uncertainty Shocks

Student Seminar #5: Tunneling (Fraud)

DateTimePresenterLocation
Monday, April 08, 2019

(19 Farvardin 1398)

12:30 – 13:30Esmaeil AliabadiKhatam University (@ 17 Daneshvar), 7th Floor, Seminar Room

“Owners of business groups are often accused of expropriating minority shareholders by tunneling resources from firms where they have low cash flow rights to firms where they have high cash flow rights. In this paper we propose a general methodology to measure the extent of tunneling activities. The methodology rests on isolating and then testing the distinctive implications of the tunneling hypothesis for the propagation of earnings shocks across firms within a group. When we apply our methodology to data on Indian business groups, we find a significant amount of tunneling, much of it occurring via nonoperating components of profit.”

Required Reading(s)Ferreting Out Tunneling: An Application to Indian Business Groups

Student Seminar #4: Improving the Design of Conditional Transfer Programs

DateTimePresenterLocation
Monday, February 25, 2019

(06 Esfand 1397)

12:30 – 13:30Mohammad MajidiKhatam University (@ 17 Daneshvar), 7th Floor, Seminar Room

“Using a student level randomization, we compare three education-based conditional cash transfers designs: a standard design, a design where part of the monthly transfers are postponed until children have to re-enroll in school, and a design that lowers the reward for attendance but incentivizes graduation and tertiary enrollment. The two nonstandard designs significantly increase enrollment rates at both the secondary and tertiary levels while delivering the same attendance gains as the standard design. Postponing some of the attendance transfers to the time of re-enrollment appears particularly effective for the most at-risk children.”

Required Reading(s)Improving the Design of Conditional Transfer Programs: Evidence from a Randomized Education Experiment in Colombia

Student Seminar #3: Beauty Is a Beast, Frog Is a Prince: Assortative Matching with Nontransferabilities

DateTimePresenterLocation
Monday, February 18, 2019

(29 Bahman 1397)

12:30 – 13:30Amirreza Ahmadzadeh
Pedram Pooyafar
Khatam University (@ 17 Daneshvar), 7th Floor, Seminar Room

“We present sufficient conditions for monotone matching in environments where utility is not fully transferable between partners. These conditions involve complementarity in types not only of the total payoff to a match, as in the transferable utility case, but also in the degree of transferability between partners. We apply our conditions to study some models of risk sharing and incentive problems.”

Required Reading(s)Beauty Is a Beast, Frog Is a Prince: Assortative Matching with Nontransferabilities

Student Seminar #2: Do Director Elections Matter?

DateTimePresenterLocation
Monday, February 04, 2019

(15 Bahman 1397)

12:30 – 13:30Peyman ShahidiKhatam University (@ 17 Daneshvar), 7th Floor, Seminar Room

“Using a hand-collected sample of election nominations for more than 30,000 directors over the period 2001–2010, we construct a novel measure of director proximity to elections called Years-to-election. We find that the closer directors of a board are to their next elections, the higher CEO turnover-performance sensitivity is. A series of tests, including one that exploits variation in Years-to-election that comes from other boards, supports a causal interpretation. Further analyses show that other governance mechanisms do not drive the relation between board Years-to-election and CEO turnover-performance sensitivity. We conclude that director elections have important implications for corporate governance.”

Required Reading(s)Do Director Elections Matter?

Student Seminar #1: Does Shareholder Composition Matter?

DateTimePresenterLocation
Monday, January 28, 2019

(08 Bahman 1397)

12:30 – 14:00M. M. ShahrabiKhatam University (@ 17 Daneshvar), 7th Floor, Seminar Room

“We examine whether institutional ownership composition is related to parameters of the market reaction to negative earnings announcements. When firms report earnings below analysts’ expectations, the stock price response is more negative for firms with higher levels of ownership by momentum or aggressive growth investors. There is no evidence, however, that these institutions cause an “overreaction” to earnings news. Ownership structure is also related to trading volume and to stock price volatility on days around earnings announcements. Our findings are consistent with the idea that the composition of institutional shareholders effects stock price behavior around the release of corporate information.”

Required Reading(s)Does Shareholder Composition Matter? Evidence from the Market Reaction to Corporate Earnings Announcements

Meeting #8: UBI (Part 1)

DateTimeLocation
Wednesday, November 14, 2018 (23 Aban 1397)11:00 – 12:00Khatam University (New Building @ 17 Daneshvar), 7th Floor, TAs Room

“Should developing countries give everyone enough money to live on? Interest in this idea has grown enormously in recent years, reflecting both positive results from a number of existing cash transfer programs and also dissatisfaction with the perceived limitations of piecemeal, targeted approaches to reducing extreme poverty. We discuss what we know (and what we do not) about three questions: what recipients would likely do with the incremental income, whether this would unlock further economic growth, and whether giving the money to everyone (as opposed to targeting it) would be wise. ”

Required Reading(s)Universal Basic Income in the Developing World

Meeting #7: Informational Cascade

DateTimeLocation
Wednesday, October 24, 2018 (02 Aban 1397)11:00 – 12:00Khatam University (New Building @ 17 Daneshvar), 7th Floor, TAs Room

“An informational cascade occurs when it is optimal for an individual, having observed the actions of those ahead of him, to follow the behavior of the preceding individual without regard to his own information. We argue that localized conformity of behavior and the fragility of mass behaviors can be explained by informational cascades.”

Required Reading(s)A Theory of Fads, Fashion, Custom, and Cultural Change as Informational Cascades

Meeting #5: Uncertainty Traps

DateTimeLocation
Monday, September 10, 2018 (19 Shahrivar 1397)15:00 – 16:00Khatam University, Room 202

“We develop a theory of endogenous uncertainty and business cycles in which short-lived shocks can generate long-lasting recessions. In the model, higher uncertainty about fundamentals discourages investment. Since agents learn from the actions of others, information flows slowly in times of low activity and uncertainty remains high, further discouraging investment. The economy displays uncertainty traps: self-reinforcing episodes of high uncertainty and low activity. Although the economy recovers quickly after small shocks, large temporary shocks may have long-lasting effects on the level of activity. The economy is subject to an information externality but uncertainty traps may remain in the efficient allocation. Embedding the mechanism in a standard business cycle framework, we find that endogenous uncertainty increases the persistence of large recessions and improves the performance of the model in accounting for the Great Recession.”

Required Reading(s)Uncertainty Traps
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