Working Paper
Firm Demographics and the Great Recession
Joint with Gian Luca Clementi and Berardino Palazzo
Abstract: The last U.S. recession stands out not only for its depth, but also for the rather slow recovery the followed it. What is less well known is that the number of productive units also dropped substantially, while it barely budged in occasion of the 1981 recession, and kept increasing during the 1991 and 2001 recessions. To the extent that the stock of establishments is a very slow–moving variable, a recession characterized by an unusually large drop in establishments will necessarily be followed by a slow recovery. In order to evaluate the quantitative significance of this simple mechanism, we build a general equilibrium business cycle model with heterogeneous firms and endogenous entry and exit, and calibrate it so that the implied firm–level and aggregate dynamics are consistent with the empirical evidence. Preliminary results show that, when hit with a negative total factor productivity shock, the model produces a much more persistent decline in employment and output than an off-the-shelf model with a fixed number of establishments.
Presentations (by coauthor or myself): SED2017, CEF2017
Joint with Gian Luca Clementi and Berardino Palazzo
Abstract: The last U.S. recession stands out not only for its depth, but also for the rather slow recovery the followed it. What is less well known is that the number of productive units also dropped substantially, while it barely budged in occasion of the 1981 recession, and kept increasing during the 1991 and 2001 recessions. To the extent that the stock of establishments is a very slow–moving variable, a recession characterized by an unusually large drop in establishments will necessarily be followed by a slow recovery. In order to evaluate the quantitative significance of this simple mechanism, we build a general equilibrium business cycle model with heterogeneous firms and endogenous entry and exit, and calibrate it so that the implied firm–level and aggregate dynamics are consistent with the empirical evidence. Preliminary results show that, when hit with a negative total factor productivity shock, the model produces a much more persistent decline in employment and output than an off-the-shelf model with a fixed number of establishments.
Presentations (by coauthor or myself): SED2017, CEF2017
Work in Progress
Market Concentration and Macro Implications
Joint with Alberto Polo
Abstract: Dispersion of production factors across firms within an industry appears as inequality in the distribution of market shares. We develop a model with dynamic oligopolies and heterogeneous firms which parsimoniously accounts for market structure in a general equilibrium setting. By endogenously generating variation in markups, this model is consistent with empirical facts on the correlation of market concentration, labor share and investment rate in the cross-section of industries. We plan to use this framework to study how market structure matters for business cycles, compared to standard business-cycle models with perfect or monopolistic competition. Our framework can also be used to investigate how underlying trends can lead to the secular decline in the U.S. labor share.
Joint with Alberto Polo
Abstract: Dispersion of production factors across firms within an industry appears as inequality in the distribution of market shares. We develop a model with dynamic oligopolies and heterogeneous firms which parsimoniously accounts for market structure in a general equilibrium setting. By endogenously generating variation in markups, this model is consistent with empirical facts on the correlation of market concentration, labor share and investment rate in the cross-section of industries. We plan to use this framework to study how market structure matters for business cycles, compared to standard business-cycle models with perfect or monopolistic competition. Our framework can also be used to investigate how underlying trends can lead to the secular decline in the U.S. labor share.
Endogenous Financial Intermediary Formation
Abstract: Building on Duffie, Garleanu, and Pedersen (2005), but with different risk types of investors, this paper develops a dynamic model of endogenous financial intermediary formation. I show that financial intermediary trades happen when two different risk type investors meet, even when one of the agents is not motivated by need. There are two reasons for investors to get involved in financial intermediation: either because they face a high risk shock and they care more about the future, or because they get a satisfactory bid-ask spread from intermediary trades.
Abstract: Building on Duffie, Garleanu, and Pedersen (2005), but with different risk types of investors, this paper develops a dynamic model of endogenous financial intermediary formation. I show that financial intermediary trades happen when two different risk type investors meet, even when one of the agents is not motivated by need. There are two reasons for investors to get involved in financial intermediation: either because they face a high risk shock and they care more about the future, or because they get a satisfactory bid-ask spread from intermediary trades.
Manuscripts
Multiplier effect of government investment on infrastructure (in Chinese), graduation thesis, June 2013
An improvement on Massera's theorem about periodic solutions of Lienard equation (in Chinese), graduation thesis, June 2013
An improvement on Massera's theorem about periodic solutions of Lienard equation (in Chinese), graduation thesis, June 2013