Speaker: Dr. 樊华 (Hua Fan)

Title: Equilibrium Wealth and Consumption Inequality under Ambiguity Aversion

Schedule: Nov 27, Wed 1:30-3:00 PM

Location: 诚明楼 (Chengming Hall), Rm 315

Introduction: Dr. Hua FAN is currently an assistant professor at the Institute for Advanced Economic Research, Dongbei University of Finance and Economics. She received her Ph.D. in Economics from the University of Hong Kong in 2023. Her research interests are macroeconomics, household finance, heterogeneous-agent modeling, inequality, and labor search. Her research has been published in Journal of Macroeconomics and International Review of Economics and Finance.

Abstract: We develop a Bewley-Huggett-style model to examine the impact of ambiguity aversion on wealth and consumption inequality. Ambiguity aversion lowers the interest rate, raises the risk premium, and mitigates wealth and consumption inequality within a general equilibrium framework. Additionally, our findings indicate that an increase in fundamental risk reduces inequality in a manner similar to heightened ambiguity aversion. In contrast, greater risk aversion exacerbates inequality by suppressing consumption more. Notably, under general equilibrium, ambiguity aversion may result in welfare gains due to the price change—a departure from conclusions drawn in previous studies.