Heterogenous Beliefs and Leverage / Learning to Learn: A Model on the Educational System

Mon, 09/27/2021 - 13:00 / 14:00

405, Viale Romania

Speaker: Debarya Jana, Riccardo Manghi , Luiss

"Heterogenous Beliefs and Leverage"

Author: Debarya Jana


The objective of this paper is to develop a simple two agent macroeconomic model consisting of lenders and borrowers with heterogenous beliefs or risk-tolerance levels to understand their interaction in a financial market.
This paper discusses how heterogeneity in beliefs among lenders and borrowers can contribute to accumulation of leverage, outcome of the financial cycles and entry and exit within the financial market. We show that heterogeneity in beliefs or risk-tolerance among the two types of agents can lead to endogenous borrowing constraints and at the same time may shift the concentration of risk into  some riskier balance sheets leading to financial instability. This paper argues that borrowers with optimistic beliefs can only accumulate higher leverage provided they match with a creditor with an optimistic belief too. In contrast, a creditor with pessimistic belief or low risk-tolerance level will be reluctant to lend to an optimistic borrower with high risk appetite leading to endogenous borrowing constraint. The proposition that this study states is that the stronger of the two belief sets binds


"Learning to learn: a model on the educational system"

Author: Riccardo Manghi


In this work I analyze the role of two different learning processes - Analysis and Synthesis - which translate into the development of two different types of skills, i.e. Constructive and Applied Skills. Then I analyze their role in determining the evolution of skills and their intergenerational transmission, with the relative implications in the labor market. First I developed an educational planning model in which the government controls the evolution of skills in society by changing the balancing carried out in the school system between Analysis and Synthesis. Moreover, in the empirical section I try to validate the functional form of the model equations with a field experiment, using a difference in differences approach. Then, using TIMMS and PISA data, I conduct another empirical analysis developing a linear regression model to calibrate the coefficients of these equations and to find the balance between the two processes currently taking place in the school systems of different European countries and its implications with respect to the results of the model.