A Theory of Slack: How Economic Slack Shapes Markets, Business Cycles, and Policies

This webpage hosts the draft chapters from a book on which I’m working. The book is under contract with Princeton University Press.

For now, only a few chapters are available, but more will be added over time. I’m sharing these draft chapters to invite feedback from readers. Your comments are invaluable in helping me make the book as correct, clear, and complete as possible. So please don’t hesitate to email me with comments and corrections.

Because this is a work in progress, both the content and structure may change. Thank you for engaging with this preliminary version.

• Preface

Part I. Introduction

• Chapter 1. Introducing slack into business cycle research
• Chapter 2. Prevalence, cyclicality, and social cost of slack
• Chapter 3. Research on which this book is based

Part II. Slackish markets

• Chapter 4. Matching function
• Chapter 5. Slackish market model
• Chapter 6. Prevalence of price and wage rigidity
• Chapter 7. Rigid price norm
• Chapter 8. Endogenous capacity
• Chapter 9. Dynamics and Beveridge curve
• Chapter 10. Market efficiency and inefficiency
• Chapter 11. Application to the labor market: A unified theory of unemployment

Part III. Slackish business cycles

• Chapter 12. Slackish business cycle model
• Chapter 13. Distinct product and labor markets
• Chapter 14. Directed search and Phillips curve

Part IV. Policies to stabilize slackish cycles

• Chapter 15. Unemployment gap
• Chapter 16. Monetary policy
• Chapter 17. Fiscal policy
• Chapter 18. Unemployment insurance
• Chapter 19. Recession detection

Part V. Conclusion

• Chapter 20. Ten takeaways
• Chapter 21. Opportunities for future research
• Chapter 22. Connections to other business cycle models

Part VI. Technical appendix

• Appendix A. Hodrick-Prescott filter
• Appendix B. Elasticities
• Appendix C. Geometry of the matching function
• Appendix D. Visit-based solution
• Appendix E. Solution concept