CEF.UP – ECO Seminar

Tuesday – January 21^st, 2025, at 13:00h | Room 305

“Returns Heterogeneity and Consumption Inequality Over the Life Cycle“

Claudio Daminato –  Lund University (Sweden)

Abstract:
“A recent literature argues that persistent heterogeneity in wealth returns (“type dependence”) as well as a positive association with wealth levels (“scale dependence”) play an important role for explaining features of the wealth distribution, especially its extreme concentration at the top. In contrast, traditional models of wealth accumulation emphasize the role of persistent differences in labor earnings. Using panel data from the PSID, we first document that a common unobserved component (which we interpret as the endowment of cognitive and non-cognitive skills of an individual) drives persistent heterogeneity in both wealth returns and labor earnings. We embed these features of the joint wealth return-earnings process in a life-cycle model of consumer behavior and show that ignoring them would dramatically understate average returns for people at the top of the wealth distribution as well as the level and rise of consumption inequality over the life cycle.”

CEF.UP – FIN Seminar

Thursday – January 23^rd, 2025 at 13:00 h | Room 305

“Co-investment Games Under Uncertainty“

Benoît Chevalier-Roignant – Emlyon Business School (France)

Abstract:

“There are many business situations in which investments by a supplier and a producer (“coinvestments”) are both necessary for either of them to grasp a business opportunity (e.g., emergence of hydrogen-powered vehicles). One of these two firms, typically the one facing a lower cost (“low-cost firm”), may be more willing to invest, but the cautionary attitude of the firm with a larger cost (“large-cost firm”) delays the coinvestment. We model supply-chain interactions in a tractable way to derive the firms’ net present values upon coinvestment and determine their Nash equilibrium investment (timing) strategies. These situations are likely to be affected by evolving market circumstances, in particular due to changes in the demand dynamics and endogenous decision (say, by the supplier) to conduct research and development (R\&D) to reduce production costs. We investigate these model extensions, which confirm the robustness of our key result.”