Lingxuan "Sean" Wu

I am a PhD Candidate in Economics at Harvard University. My research interests are in macroeconomics, finance, and behavioral economics. I am on the 2024-25 academic job market.

Contact: lingxuanwu@g.harvard.edu 

CV: here 

Job Market Paper

Abstract: We propose a theory of shallow thinking to capture people’s limited understanding of the long causal chains involved in the propagation of macroeconomic shocks. We conceptualize general equilibrium as a system of causal relations in a directed graph, and our theory predicts that deeper relations—those further from shocks—have less influence on beliefs. Our estimation suggests that, on average, people understand about 2.6 steps of propagation. In a New Keynesian model with shallow thinking, (i) long-term nominal interest rates overreact to monetary policy shocks as agents underperceive a long offset loop, but underreact to cost-push shocks due to underappreciation of propagation; (ii) inflation expectations negatively predict bond excess returns, controlling for yields; (iii) cost-push shocks are more inflationary than under rational expectations, because agents better understand shallow amplifying relations than a deep offsetting one; and (iv) more persistent cost-push shocks lead to higher inflation, contrary to rational expectations. In a real business cycle model, in response to productivity shocks, (i) output displays a hump-shaped, more persistent response; (ii) investment, labor hours, and the stock price show amplified reactions; and (iii) the stock market first booms and then crashes.

Other Working Papers

Work in Progress

Teaching