About the Speaker:

Guiying Wu is a PhD candidate from University of Oxford. Her areas of interest are in Macroeconomics, Investment, Corporate Finance, Quantitative Methods, Applied Econometrics, Structural Estimation, Dynamic Panel Data Macroeconomics and Quantitative Methods.

Abstract:

This paper develops a structural framework to estimate the effects of uncertainty on investment behaviour and capital accumulation at the firm level. Our model allows uncertainty to affect capital accumulation through three possible channels that have been highlighted in the literature: the Hartman-Abel-Caballero effect; different forms of capital adjustment costs; and a risk premium component in the discount rate. We discuss identification of these three distinct effects, and allow for unobserved heterogeneity in both firm size and growth. Parameters are estimated using simulated method of moments, matching empirical data for UK manufacturing firms. The estimated model indicates that higher uncertainty reduces both firm size and capital intensity in the long run, primarily through the discount rate effect.

Reservation:

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