Contact Information
Department of Economics
Northwestern University
2211 Campus Drive
Evanston, IL 60208 Phone:
773-668-7736
KwokYan.Chiu@u.northwestern.edu
Personal Website: https://chiukwokyan.github.io/
Education
Ph.D., Economics, Northwestern University, 2025 (expected)
MA, Economics, Northwestern University, 2021
MSc, Econometrics and Mathematical Economics, London School of Economics, 2018
BSc, Mathematics and Economics, Hong Kong University of Science and Technology, 2016.
Primary Fields of Specialization
Macroeconomics
Secondary Fields of Specialization
Finance, Housing
Curriculum Vitae
Job Market Paper
“Heterogeneous Beliefs about Stock Returns and Wealth Inequality”
Abstract: This paper investigates how differences in subjective beliefs about stock returns contribute to wealth inequality through portfolio choice. Using the Michigan Survey of Consumers, I find that households’ beliefs about future stock returns are more pessimistic than historical averages and more widely dispersed than those of professional investors. Optimistic households are more likely to participate in the stock market and invest more heavily in equities. Motivated by these findings, I develop and calibrate a heterogeneous-agent model that incorporates the empirical distribution of beliefs. The model replicates two key patterns in household finance. First, it generates substantial non-participation in the stock market, even without participation costs, due to the prevalence of pessimistic beliefs. Second, it produces a positive correlation between wealth and portfolio returns, as optimistic households invest more in equity and accumulate wealth faster. Compared to a model without heterogeneous beliefs, my model generates an additional 0.12 in the Gini coefficient of wealth inequality and 33 percent more wealth owned by the top 10% of the households. These findings underscore the role of belief heterogeneity as a driver of household financial decisions and wealth inequality in the US.
Other Research Papers
“How Important is Belief Heterogeneity of Households?”
Download Preliminary Draft (PDF)
Abstract: Macroeconomic expectations are known to correlate with socioeconomic status, but this relationship is absent in most heterogeneous-agent models. I find that, specifically, households with low marginal propensities to consume (MPC) or high elasticity of intertemporal substitution (EIS) update their forecasts faster than others in response to the business cycle. I develop and estimate a heterogeneous-agent model with rational expectations that captures the empirical correlation between beliefs and household characteristics. Compared to a typical calibration that assumes no such correlation, I find that this model implies more amplification and consumption heterogeneity in response to shocks.
Companion note: Solving Incomplete Information General Equilibrium Models in Sequence Space Companion Juypter notebook: Notebook
“Credit Access and Housing Quality” Joint with Diego Cid and Pablo Sanchez
Download Preliminary Draft (PDF)
Abstract: Would widespread credit access solve housing quality issues? Using data from Mexico, we find a huge effect of credit access – access to mortgage loans for households in the lowest-income decile is equivalent to raising their income to the middle-income decile in terms of improvement in housing quality. This correlation falls for high-income households. We present a heterogeneous-agent model with a discrete housing choice and borrowing constraint to match our empirical facts. In this model, low-income households are differentially affected by limited access to credit as they are more financially constrained. We use this model to study the effect of credit provision and find that housing quality can be improved by 22 percent if all households in Mexico are given access to mortgage loans.
Teaching
References
Prof. Matthias Doepke (Committee Chair)
Prof. Alireza Tahbaz-Salehi
Prof. Marios Angeletos
Prof. Matthew Rognlie