Fernando Parro (Penn State University)

Fernando Parro (Penn State University)

Oct 20, 2023 - 3:40 PM
to Oct 20, 2023 - 5:00 PM

Description: Department Seminar: Fernando Parro (Penn State University)

Location: Virtual

Contact Person: GianCarlo Moschini

Title: Learning and Expectations in Dynamic Spatial Economies

Abstract: The impact of shocks in dynamic environments depends on how forward-looking agents anticipate the path of future fundamentals that shape their decisions. We incorporate flexible beliefs about future fundamentals into a general class of dynamic spatial models, allowing beliefs to be evolving, uncertain, and heterogeneous across groups of agents. We show how to implement our methodology to study both ex-ante and ex-post shocks to fundamentals. We apply our method to two settings: an ex-ante study of the economic impacts of climate change, and an ex-post evaluation of the China productivity shock on the U.S. economy. In both cases, we study the impact of deviations from perfect foresight on different outcomes.

Web link to the paper: https://www.dropbox.com/s/vso5n0ybs3ijoxu/LEDSE.pdf?raw=1