Working Papers/In Progress

Endogenous Uncertainty and Credit Crunches, with Ludwig Straub

• R&R at Review of Economic Studies

• We develop a theory of endogenous uncertainty where uncertainty is caused by financial distress. Because uncertainty reinforces financial distress, temporary shocks can lead to "funding freezes" where firms are persistently cut off from external funding.

The Colocation Problem: Dual-Earner Job Search and Labor Market Efficiency, with Hanno Foerster

• We provide general results on when "co-location frictions" are binding in dual-earners' job search, and we develop a framework to quantify its implications for career dynamics, migration, gender inequality, and social welfare.

Credit Crunches, Information Failures, and the Persistence of Pessimism, with Ludwig Straub

• The main ideas of this paper are now subsumed by the papers "Endogenous Uncertainty and Credit Crunches" and "Endogenous Second Moments"

Publications

Robust Predictions for DSGE Models with Incomplete Information, with Ryan Chahrour

• AEJ: Macroeconomics, 15(1), January 2023, pp. 173-208

• We study the quantitative potential of business cycle models with information frictions. We offer predictions that are robust across all possible private information structures that agents may have. We find that confidence-shocks can explain up to 51% of U.S. business cycle fluctuations.

Mismatch Cycles, with Isaac Baley and Ana Figueiredo

• Journal of Political Economy, 130(11), November 2022, pp. 2943-2984

• We build an equilibrium model of the labor market with directed search, multidimensional sorting, learning about skills, and aggregate shocks. We use the model to study the dynamics of skill mismatch over the business cycle. During recessions, highly mismatched jobs are destroyed but also created. The patterns are consistent with direct evidence from the NLSY79 and O*NET.

A Quantitative Theory of Political Transitions [Online Appendix], with Lukas Buchheim

• Review of Economic Studies, 87(4), July 2020, pp. 1726-1756

• We develop a quantitative theory of repeated political transitions caused by revolts and reforms. The model generates a process of political transitions that looks remarkably close to the data.

Dynamic Oligopoly Pricing: Evidence from the Airline Industry, with Caspar Siegert

• International Journal of Industrial Organization, 71, July 2020

• We explore how pricing dynamics in the European airline industry vary with competition and customer heterogeneity. The documented patterns are consistent with intertemporal price discrimination.

Endogenous Second Moments: A Unified Approach to Fluctuations in Risk, Dispersion and Uncertainty, with Ludwig Straub

• Journal of Economic Theory, 183, September 2019, pp. 625-660.

• The cross-sectional dispersion of output, employment, and Solow residuals becomes countercyclical if capital and labor are complements, accounting for a significant share of the empirical cyclicality in second moments. Additional applications explain endogenous fluctuations in risk and uncertainty.

Optimal Delegated Search with Adverse Selection and Moral Hazard

• Theoretical Economics, 11(1), January 2016, pp. 253-278.

• I study a model of delegated search. The distribution of search revenues is unknown to the principal and has to be elicited from the agent. Moreover, the search process is unobservable, requiring search to be self-enforcing. The second-best is implemented by a menu of simple bonus contracts.