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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Matching with Bounded Probabilities: A Locally Cobb-Douglas Specification
We propose the Soft-Min Cobb-Douglas (SMCD) matching function, a tractable three-parameter specification satisfying four desiderata simultaneously: smoothness and concavity, constant returns to scale, exact joint calibration to any target (θ*, f*, ε*), and bounded matching probabilities f, q ∈ (0, 1) for all market tightness. Cobb-Douglas fails the probability bounds; Den Haan–Ramey–Watson (HRW) cannot jointly target level and elasticity. Bounded probabilities imply a strictly decreasing matching elasticity and, via the Hosios condition, a countercyclical efficiency wedge that Cobb-Douglas conceals and HRW mismeasures. Estimating on U.S. monthly data (1951–2025), we find a structural break in matching efficiency in October 2008. SMCD strictly dominates HRW in fit while respecting probability bounds by construction; Cobb-Douglas achieves lower unconditional RMSE but violates q ≤ 1 in 9–12% of months, concentrated in recessions.
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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.
Work in Progress
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Bayesian estimation of a liquidity-augmented model with endogenous business formation: application to inflation
We develop a liquidity-augmented model (LAMMA) with endogenous business formation. Money is the sole medium of exchange; bonds, physical capital, and firm equity provide indirect liquidity through a secondary asset market whose yield is the policy instrument. Entry subject to sunk costs adds three channels absent from fixed-firm-stock liquidity models. First, the slow-moving firm measure generates hump-shaped investment dynamics without adjustment costs, as sunk entry costs provide endogenous adjustment on the extensive margin and the two investment margins peak at different horizons. Second, separate tradability fractions for capital and equity decompose monetary transmission across asset classes: capital-liquidity shocks drive physical investment while equity-liquidity shocks drive entry, and the estimation identifies which channel dominates. Third, under Rotemberg pricing the firm measure enters the Phillips curve as a backward-looking state, and the strength of this intrinsic persistence channel is governed by the liquidity regime---liquid equity markets amplify entry fluctuations and hence the backward-looking component, while tight liquidity mutes entry and makes inflation more forward-looking process. Bayesian estimation targets seven macroeconomic observables over 1951Q1--2024Q4.