Seminar in Economics | Estimating Individual Responses when Tomorrow Matters with Stephane Bonhomme
Welcome to this Higher Seminar in Economics organised by the Department of Economics, SSE. The seminar speaker is Stephane Bonhomme, University of Chicago, presenting "Estimating Individual Responses when Tomorrow Matters".
We study empirical decision rules that depend not only on current covariates, but also on the process of covariates. We obtain those as the nonparametric reduced forms of structural dynamic models of individual choice, where the process of covariates governs the individual’s expectations about future values. We describe two strategies to identify and estimate decision rules: one that requires the availability of subjective expectations data, and another one that relies on the assumption that individuals have rational beliefs. We use our approach to estimate the impact of a change in the covariates’ process on decisions and other outcomes. We decompose the total impact of such a change into a contemporaneous effect and a dynamic effect accounting for expectations. We illustrateour approach in two settings. In a model of consumption and saving, we show how to estimate the effects on consumption decisions of a change in the income process. In a model of agricultural production, we show how to estimate the impact of changes in
today’s weather and expectations about tomorrow’s weather, thus accounting for the possibility of adaptation
Stephane Bonhomme is Professor of Econometrics at the University of Chicago. Stephane's research focuses on econometrics, labour economics and econometric theory, with a special interest in latent variable modeling and panel data.
More About the Speaker
The seminar takes place at Stockholm School of Economics, Sveavägen 65, room 750.
Please contact Fanni.Antal@hhs.se if you have any questions.