economic slack

Almost all markets have slack: idle or unemployed workers, unsold goods, empty rooms or seats. This book develops a theory of economic slack and explores how it shapes markets, business cycles, and policies.

This paper builds a Beveridgean model of the Phillips curve. Prices respond to slack so the divine coincidence holds: prices are stable at full employment. The Phillips curve is kinked if wage cuts are more costly to producers than price hikes.

This paper develops a policy-oriented business-cycle model with fluctuating unemployment and long zero-lower-bound episodes. The innovations are that producers and consumers meet through a matching function, and wealth enters the utility function.

This paper develops a model of unemployment fluctuations. The innovation is to represent the labor and product markets with a matching structure. The model simultaneously features Keynesian unemployment, classical unemployment, and frictional unemployment.