Stephen Terry, Institute Junior Faculty Fellow, to Give 10/18 Wed@Hariri/Meet Our Fellows Talk

3:00 PM – 4:30 PM on Wednesday, October 18, 2017
Refreshments & networking at 2:45 PM
Hariri Institute for Computing
111 Cummington Mall, Room 180

The Hariri Institute for Computing kicks off its 2017-2018 “Meet Our Fellows” series, which will showcase the Institute’s 2017 Junior Faculty Fellows and Graduate Student Fellows. Prior to Junior Faculty Fellow presentations, a Graduate Student Fellow will give a 5-minute preview of his or her current research.

Meet Our Fellows/Research Preview: Sarah Adel Bargal
Hariri Graduate Fellow, Hariri Institute for Computing
PhD candidate, Computer Science (CAS)
Bargal’s research interests lie at the intersection of computer vision and machine learning. She is advised by Stan Sclaroff (CS), and their work focuses on developing deep learning formulations for the analysis of human motion and activities in video.

Meet Our Fellows/Junior Faculty Fellow Presentation
Short-Term Shocks and Long-Term Investment
Stephen Terry
Junior Faculty Fellow, Hariri Institute for Computing
Assistant Professor, Economics, College of Arts & Sciences
With an introduction by Marc Rysman, Professor, Department of Economics

Abstract: Businesses face large shocks to their profitability. While buffeted with such shocks, firms make long-term decisions to invest in new capacity and research new ideas for the future. Using a dataset of large US public firms, we first demonstrate that firms appear to experience two distinct types of shocks: short-term shocks (shifting profits for today), and long-term shocks (shifting profits for today and the future). We also show that firms’ investment in capacity and research declines when they experience short-term adversity, suggesting that firms may suffer from forces such as financial frictions, information problems, or short-termism. We then build a flexible model of firm investment, estimating a substantial loss in firm value due to the link between short-term shocks and long-term investment.

Research Keywords: short-termism, firms, growth, recessions, macroeconomy, simulation

Bio: Stephen Terry has been selected as an Institute Junior Faculty Fellow beginning in Fall 2017. Stephen is an assistant professor of economics and a macroeconomist with a Ph.D. in Economics from Stanford University in 2015. Stephen studies the role of individual firms and business managers in driving outcomes for the economy as a whole. In one set of work, Stephen studies short-termism. By building factories, inventing new products, hiring new workers, and entering new markets, firms continually make choices that build long-term value for society. Using a mixture of empirical and simulation-based analysis, Stephen’s work in this area models the economy as made up of individual managers facing incentives to sometimes sacrifice such long-term gains, and macroeconomic growth, for the short-term profits of their firm. Stephen’s also studies models of the economy in which very disaggregated considerations, like the time and resources required to plan for the construction of factories or hire new workers, can collectively influence the severity of recessions and the size of booms for the economy as a whole. Stephen’s research typically employs large datasets of firm behavior alongside models of the economy built on individual firm-level simulation.