Jose Maria Barrero
Job Market Candidate

Stanford University
Department of Economics
579 Serra Mall
Stanford, CA 94305
+1 (215) 800-8545

Curriculum Vitae

Macroeconomics, Finance

Expected Graduation Date:
June 2019

Thesis Committee:

Nicholas Bloom (Primary):

Monika Piazzesi:

Peter J. Klenow:

Amit Seru:

Juliane Begenau:

Working Papers

The Micro and Macro of Managerial Beliefs (Job Market Paper)
[Appendix] [Latest Slides] [SSRN Abstract]

I study how biases in managerial beliefs affect firm performance and the macro-economy. Using confidential survey data to test whether US managers have biased beliefs, I establish three facts. (1) Managers are neither over-optimistic nor pessimistic: their forecasts for future sales growth are correct on average. (2) Managers are overconfident: they underestimate future sales growth volatility. (3) Managers overextrapolate: their forecasts are too optimistic or pessimistic depending on whether the firm is growing or shrinking at the time of the forecast. To quantify the micro and macro implications of these facts, I build and estimate a general equilibrium model in which managers of heterogeneous firms may have biased beliefs and make dynamic hiring decisions subject to adjustment costs. Biased managers in the model overreact to changes in their firm's profitability because they believe it is more persistent and stable than it really is. The model thus implies that a typical firm's value would increase by 1.9 percent if it hired a rational manager. At the macro level, pervasive overreaction results in too many resources spent on reallocation. Welfare would be higher by 1 percent in an economy with rational managers.

Short and Long Run Uncertainty (with Nicholas Bloom and Ian Wright)
[Earlier NBER Working Paper Version]

Uncertainty appears to have both a short-run and a long-run component, which we measure using firm and macro implied volatility data from equity options of 30 days to 5 years duration. We ask what may be driving uncertainty over these different time horizons, finding that policy uncertainty, interest rate volatility, and currency volatility are particularly associated with long-run uncertainty, while oil price volatility and CEO turnover appear to impact short- and long-run uncertainty about equally. Examining a panel of over 4,000 firms from 1996 to 2016 we find that investment is relatively more sensitive to long-run uncertainty than hiring, and about as sensitive to long-run uncertainty as R&D. Investment is also more sensitive to the overall level of uncertainty than both R&D and hiring, holding fixed the relative magnitude of short- versus longrun uncertainty. We investigate the channels underlying these different sensitivies to short- versus long-run uncertainty, and show empirically and in simulations that lower depreciation rates and higher adjustment costs explain why investment is more sensitive to longer-run uncertainty. Collectively, these results suggest that recent events that have raised long-run policy uncertainty may be particularly damaging to growth by reducing investment and R&D.

Evolving Differences Among Publicly-Traded Firms in the United States, 1960-2015

I use data on all publicly traded firms in the United States to document the evolving differences between large and small firms over the period covering 1960 to 2015. Focusing separately on the financial and non-financial sectors, I document patterns related to the number of active publicly-traded firms; size differences between the firms at the 10th and 90th percentiles; the share of sales and assets held by firms at the top of the distribution; the behavior of entrants; volatility differences among small and large firms; the significance of the technology sector; and the sectoral affiliation of publicly-traded firms. I find evidence that, over the past 55 years, disparity (in size and volatility) between the largest and smallest firms has increased, although the picture is more complicated in the financial sector where large firms, for example, have become relatively volatile in comparison with small firms. New non-financial public companies have also become smaller relative to incumbents, while all entrants have had a smaller chance of surviving during more recent decades. My analysis also uncovers a shift away from manufacturing and towards services, retail and wholesale trade, and finance, along with the increasing prominence of high-technology industries.

Work in Progress

The Survey of Business Uncertainty
(with David Altig, Nicholas Bloom, Steven J. Davis, Brent Meyer and Nicholas Parker)

[Official Survey Website] [Conference Presentation Slides] [Survey Methodology Slides]

The Atlanta Fed/Chicago-Booth/Stanford Survey of Business Uncertainty (SBU) is fielded by the Federal Reserve Bank of Atlanta. We collect ongoing high-frequency (monthly) information on firms' subjective probability distributions over own-firm future sales growth rates, employment levels, average unit cost growth, and capital investment expenditures. Using these data, we create indices reflecting aggregated expectations (first moment) and uncertainty (second moment) responses related to each topic. We also create summary expectations and uncertainty indices based on responses to the four topic areas. Finally, we collect periodic responses to several special questions on salient issues of concern to decision-makers in the public and private sectors.