Publication:

• Empirical evidence on the dynamics of investment under uncertainty in the US (2021) with Qazi Haque and Leandro M. Magnusson in Oxford Bulletin of Economics and Statistics

Working Papers: (available upon request)

• Life-cycle Implications of Latent Health Type Learning

Abstract:  Life-cycle models that feature health risk and latent health type implicitly assume that agents are equipped with the knowledge about their type. In this paper, we study the lifecycle decisions and welfare implications of a relaxation to this assumption by introducing type uncertainty for agents, but allow them to resolve it via Bayesian updating of beliefs. We develop a type learning mechanism and document its properties. Then, we embed the type learning mechanism into life-cycle model that features health risk to study the quantitative implications on the life-cycle profiles and welfare of agents facing type uncertainty. When the model is solved numerically using the estimated type-dependent transition probabilities of U.S. high school graduates, our simulation results show that: (i) most agents concentrate their beliefs toward true type within their lifetime, thereby resolving type uncertainty

on average by approximately 80% based on a measure of conditional entropy, and (ii) type uncertainty introduces an additional source of heterogeneity in decisions of agents that ultimately affect life-cycle profiles of agents asymmetrically dependent on their type. Overall, our welfare analyses indicate that the lack of knowledge about their type is costly for agents and can amount to approximately 3% of lifetime consumption.

• Estimation of Growth Convergence using a Stochastic Production Frontier Model with Latent Group Structures

Abstract: We test whether countries' growth converges to a common, world production frontier taking into account heterogeneity across countries and over time. We estimate the production frontier and inefficiency term using the recently proposed method of Tomioka, Yang and Zhang (2024). When the production function is characterized by a Cobb-Douglas function, we find evidence in favor of a common, world production frontier and some evidence of growth convergence to that world production frontier. However, under more flexible Translog function, there is evidence of heterogeneity in the frontier and growth convergence result seems to disappear. In both specifications, we find evidence of a mixture structure in the inefficiency term.

Work-in-Progress:

• Tax Effort and Inequality in Low Income Countries with Dawit Tessema and Abebe Shimeles (IMF internship project)