Economic Slack

This graduate course presents various matching models of economic slack. It uses them to study business-cycle fluctuations; Keynesian, classical, and frictional unemployment; optimal monetary policy and the zero lower bound; and optimal government spending.

December 2022 · Pascal Michaillat

An Economical Business-Cycle Model

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

April 2022 · Pascal Michaillat, Emmanuel Saez

Beveridgean Unemployment Gap

This paper develops a sufficient-statistic formula for the unemployment gap based on the Beveridge curve. The formula features the Beveridge elasticity, unemployment cost, and recruiting cost. In the United States the unemployment gap is generally positive and is countercyclical.

December 2021 · Pascal Michaillat, Emmanuel Saez

Optimal Public Expenditure with Inefficient Unemployment

This paper shows that when unemployment is inefficient, optimal public expenditure deviates from the Samuelson rule to reduce the unemployment gap. Optimal stimulus spending is governed by the unemployment gap, unemployment multiplier, and an elasticity of substitution.

May 2019 · Pascal Michaillat, Emmanuel Saez

A Macroeconomic Approach to Optimal Unemployment Insurance: Applications

This paper explores how the optimal replacement rate of unemployment insurance varies over the business cycle in the United States. It finds that the optimal replacement rate is countercyclical, just like the actual replacement rate.

May 2018 · Camille Landais, Pascal Michaillat, Emmanuel Saez

A Macroeconomic Approach to Optimal Unemployment Insurance: Theory

This paper develops a theory of optimal unemployment insurance in matching models. It derives a sufficient-statistic formula for optimal unemployment insurance, which is useful to determine the optimal cyclicality of unemployment insurance.

May 2018 · Camille Landais, Pascal Michaillat, Emmanuel Saez