Research

Publications:

• Optimal attention and heterogeneous precautionary saving behavior [ CESifo Working Paper version] 

Journal of Economic Dynamics and Control, 2021, 131, 104230

Summary: People with different levels of wealth pay different amounts of attention to the capital income risk and display heterogeneous precautionary saving behavior.

Working papers: 

• Nominal Rigidities, Rational Inattention, and the Optimal Price Index Stabilization Policy  (with Shengliang Ou, Donghai Zhang and Renbin Zhang)

Revise and Resubmit at Journal of Economic Theory. 

• Attention Allocation and Heterogeneous Consumption Responses (with Yulei Luo and Jun Nie )

Summary: Consumption model with both labor and capital income risks, limited attention and recursive utility can help to explain consumption responses to the income risks and the relative volatility of consumption to income observed in the U.S. economy, and we also find that the welfare losses due to limited attention are insignificant. 

• Information acquisition, macroeconomic expectations, and economic behavior (with Markus Kontny)

Summary: Individual's attention allocation behavior depends on some certain characteristics and attention allocation affects expectation updating, forecasting bias and purchasing attitudes toward durable goods and home.

• Consumption dynamics under diagnostic expectations (with Jinting Guo and Yulei Luo)

Summary: Diagnostic expectation due to representativeness heuristic can help explain the puzzling empirical consumption behavior: current consumption change responds positively to the current income shock, but negatively to the previous income shock (excess sensitivity puzzle).

• Attention, expectation updating, and subjective models of the macroeconomy (with Li Tang)

Summary: Paying attention plays an important role in households' information acquisition and expectation formation, as well as their subjective model of macroeconomics.

Summary: Under rational inattention, central bank would optimally allocate larger (smaller) weight to sectors with more flexible (stickier) prices.

• Optimal saving and the timing of the resolution of uncertainty in capital return  [SSRN]

Summary: A temporal resolution of uncertainty model with rationally inattentive consumers helps to understand empirical facts of decreasing personal saving rate, increasing wealth inequality in US data since 1980s. 

Work in progress:

• Consumption and investment-allocation under information acquisition and information delegation