A leading econometrician

At Iowa’s research-intensive business school, students collaborate with world-renowned faculty on high-quality research and top-tier job placements.

Associate Professor of Economics Antonio Galvao says students have the unique advantage of learning economic theory and empirical analysis with a business focus that other programs can’t match. The Tippie College of Business—named a top 20 best value college for economics majors (Payscale.com)—prepares students for complex economic jobs with employers such as the Federal Reserve Bank, Amazon, and Princeton University.

“We produce graduates to think with a strong foundation in economic theory and empirical analysis so that they can go into academic, high-end industry or government jobs that are very demanding.”

“We produce graduates to think with a strong foundation in economic theory and empirical analysis so that they can go into academic, high-end industry, or government jobs that are very demanding,” Galvao says.

A leading econometrician, Galvao develops estimation and testing procedures to quantify economic models. He’s currently testing whether investment decisions are sensitive to a company’s cash flow.

Because standard econometric methods can overlook variations in demand and generate inconsistent data estimates, Galvao and his co-researchers built an econometric model for measurement error problems in the data.

“Theorists say that the way the firms invest should not be sensitive to any cash flow, and the investment is just a function of the investment demand, the capital opportunity” Galvao says. “The other theory is that because of market failures, as asymmetric information problems for instance, some firms are financially constrained and cannot borrow to invest. So their cash flow is very important. We’re testing that idea.”

After using its technique and correcting for the measurement error, Galvao’s team proved empirically that firms’ investment decisions are really sensitive to cash flow.

“The more cash flow a firm has, the more it can invest,” Galvao says.