Research
Publications & Working Papers · Research Statement →
Publications
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Productive Demand and Sectoral Capacity Utilization
While the Solow residual is widely used as a measure of technological progress, it also captures fluctuations in input utilization and other factors. We develop a multisector model to decompose capacity utilization and attribute variation in the Solow residual to demand, technology, and mismeasurement. Bayesian estimation with sectoral utilization data shows search demand shocks explain most variance in output and utilization, and replicate observed sectoral comovement. Impulse response analysis further demonstrates that demand shocks uniquely generate three-way comovement among utilization rates and the Solow residual.
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Unemployment and Labor Productivity Comovement: The Role of Firm Exit
We extend the Diamond–Mortensen–Pissarides model to incorporate sunk entry costs and distinct business destruction/match separation channels, resolving empirical discrepancies in unemployment–productivity comovement and matching observed dynamic labor market correlations.
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Unsecured Credit, Product Variety, and Unemployment Dynamics
Analyzes feedback between revolving credit and product development using an endogenous borrowing constraint and firm entry model. Financial shocks are shown to be essential in matching observed unemployment and credit dynamics during the Great Recession.
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Corporate Finance, Monetary Policy, and Aggregate Demand
Analyzes how heterogeneity of financial frictions and monopolistic competition influence the pass-through of the nominal interest rate to the real lending rate, its transmission into investment, and corporate cash holdings. Firms finance stochastic investment opportunities with either bank-issued credit or money. Financial constraints raise firms' sensitivity to monetary policy; a mean-preserving spread of financial frictions reduces investment and output, strengthens transmission, and reduces the external share of finance. Estimates industry-level markups using the production method.
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New Monetarism with Endogenous Product Variety and Monopolistic Competition
Examines endogenous variety in a New Monetarist framework, showing how inflation interacts with market structure to affect welfare and firm size under CES and variable elasticity preferences. Under variable elasticity of demand, inflation can increase firm size, reduce markups, and raise welfare even though output is lower. Under CES preferences, the Friedman rule is optimal and the welfare cost of inflation increases monotonically with the markup.
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Decentralizing Constrained-Efficient Allocations in the Lagos–Wright Pure Currency Economy
Working Papers
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Role of Endogenous Business Formation and Exit for Unemployment and Vacancy Dynamics
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Liquidity, Unemployment, and the Stock Market
Interest-rate spreads and the unemployment rate vary negatively with stock prices. Liquidity plays a role in a Mortensen–Pissarides economy with a twist: households self-insure against preference shocks by accumulating equity claims. Higher stock market valuations relax liquidity constraints, creating an aggregate demand channel that strengthens firms' hiring incentives. A negative shock to stocks decreases the liquidity value of equity and increases unemployment.