Thursday 15 October 2026 1:00pm to 2:15pm
Cambridge Judge Business School W2.02
About
About Jose Maria Barrero (ITAM Business School)
Abstract:
How much does managerial uncertainty about cash-flow drivers matter for ag gregate investment? Using surveys of over 31,000 managers across 41 countries, we establish two new facts. (1) Subjective uncertainty about own-firm sales and realized sales volatility both decline with GDP per capita. (2) Managers underestimate volatility everywhere (they are overprecise), but more so in low-volatility rich countries. Cali brating a heterogeneous-firm model to match our facts, we show they rationalize the empirical upward-sloping relationship between aggregate capital-output ratios and GDP percapita. Overprecision accounts for half of the gradient, suggesting managerial belief distortions might be a first-order driver of cross-country investment.