Moen Meets Rotemberg: An Earthly Model of the Divine Coincidence

This paper develops a simple business-cycle model with divine coincidence: inflation is on target when unemployment is efficient. The divine coincidence arises from directed search under a quadratic price-adjustment cost.

January 2024 · Pascal Michaillat, Emmanuel Saez

Slackish Business Cycles

This book reviews basic facts about business cycles. It then develops a matching model to explain these business-cycle facts. Finally, it explains how monetary policy and government spending should be designed to stabilize business cycles.

January 2024 · Pascal Michaillat

Pricing under Fairness Concerns

This paper develops a model of pricing in which buyers care about the fairness of markups but misinfer them from prices. The model yields price rigidity, generates realistic Phillips curves, and explains why people dislike inflation so much.

June 2021 · Erik Eyster, Kristof Madarasz, Pascal Michaillat