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.

So far only a few chapters are available, but additional chapters 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. Please don’t hesitate to email me with comments and corrections. As the book is a work in progress, the content and structure may change, so 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. A unified theory of unemployment

Part III. Slackish business cycles

Part IV. Policies to stabilize slackish cycles

Part V. Conclusion

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