Publications

• Data Files: Zenodo  
• Data Scripts/Codes: Github
• Technical Appendix: PDF 

Under Revision (2nd Round and R&R's)

• Status: Under Review Second Round (Journal of Economic Theory)
• Abstract: What are the welfare implications of markup heterogeneity across firms? In standard monopolistic competition models, such heterogeneity implies inefficiency even in the presence of free entry. We enrich the standard model with heterogeneous firms so that preferences are non-separable in off-market time and market consumption and show that homogeneity of markups is now neither necessary nor sufficient for efficiency. The marginal cost of the marginal firm is weakly inefficiently high when off-market time and market consumption are complements and inefficiently low when they are substitutes, and the equilibrium allocation devotes weakly too few resources to firm creation. However, when off-market time and market consumption are perfect complements, markups are heterogeneous across firms and yet the equilibrium allocation is efficient. 

• Status: Under Review Second Round (AEJ: Macroeconomics)
• Abstract: The U.S. health-services sector has grown both in terms of its expenditure share and relative price. Using a two-sector general equilibrium model with monopolistic competition and endogenous population, we find that relative price growth is almost entirely attributable to increasing relative sectoral markups. Demand effects from aging play only a minor role driving up prices and expenditure shares. Controlling for GE effects and rising relative markups, we estimate that health-sector TFP has grown since the 1980s at a rate greater than 1\% annually, dampening relative price growth, while leading to higher health-sector output, partially driving up aggregate expenditure shares.
• Presentations: (2023) University of Bristol, UK; University of Manchester, UK; SEA Meetings, New Orleans; Goethe University, Frankfurt, Germany; University of Wuerzburg, Germany; UCSB, LAEF 2nd Labor Markets and Macroeconomic Outcomes Conference; FRB, Cleveland.
• Notes: A previous version was circulated under the titles The Causal Factors Driving the Rise in Health Services Prices and The Causal Factors Driving the Rise in U.S. Health-services Prices.

Under Review (1st Round Submissions)

• Status: Under Review (Review of Economic Studies)
• Abstract: We explore the relationship between household time-use and the long-run rise in the services share of expenditure. Using the American Time Use Survey, we study how households allocate their off-market time between using goods and using services. While relative goods to services market expenditure has declined along the development path, relative off-market time spent using goods versus services has actually risen. To understand which of rising incomes, declining relative prices, or changing preferences is the primary driver of simultaneous expenditure and time use trends, we estimate a model where consumers have non-separable preferences over market consumption and multiple different off-market activities. We find no role for income effects driving structural change in our preferred specifications. Structural change is almost entirely attributable to both falling relative goods/services prices and the rising relative off-market efficiency of using goods versus services.
• Presentations: (2024) X Workshop on Structural Transformation and Macroeconomic Dynamics, Cagliari, Italy; (2023) FRB, Atlanta; (2022) FRB, Philadelphia; Midwest Macro, Dallas, TX; UCSB, LAEF Growth, Development, and Structural Transformation Conference; University of Pittsburgh; University of Wuerzburg, Germany; (2021) NBER-NAS SBIES (Virtual); Vigo Workshop on Dynamic Macro, Vigo Spain; SED, Minneapolis, MN; University of Miami, Florida (Virtual); (2020) SNDE, Virtual; University of Miami, Florida (Virtual); (2019) UCSB; Midwest Macro, East Lansing, MI; SED, Saint Louis, MO; (2018) UCSB.
• Supplementary Material: Technical Appendices

Working Papers

• Status: Job Market Paper, 2024; Revising for Review of Economic Studies
• Abstract: I construct and estimate a measure of inequality that accounts for non-separabilities between the allocation of market expenditure and off-market time toward a vector of multiple consumption activities. The measure is inspired by several data facts: 1) I show off-market activities encoded in the American Time Use Survey can be readily linked to specific kinds of market expenditures; 2) given the former observation, I show that there is less heterogeneity, conditional on income, in off-market time use allocations across many different types of activities compared to expenditure heterogeneity. Given these data observations, I build a model of household off-market time use and expenditure allocations that yields a household-specific cost-of-living measure which is a function of a household’s wages, market expenditure allocation, and off-market time use allocation. The model is general such that the cost-of-living measure can be computed for preference specification that satisfies basic regularity conditions. Using several different specifications, I estimate that measures of dispersion which account for the non-separabilities I model are lower than income dispersion, expenditure dispersion, and wage dispersion. This is because I estimate that for all types of off-market activity categories I consider, off-market time and market expenditure are complements (not substitutes). While quantities of market products purchased are scalable in income, time is not. When market goods and off-market time are complements, consumers’ ability to increase utility by buying more market products is limited by the fact that they must also allocate time toward using such products in order to derive utility from them.
• Presentations:  (2024) SAEe, Palma de Mallorca, Spain; SEA Meetings, Washington D.C. (upcoming); University of California, Irvine; FRB, Cleveland; SED, Barcelona; (2023) University of Warwick, UK; FRB, Philadelphia; University of Connecticut; Federal Reserve Board of Governors; FRB, St. Louis; The Australian National University; (2022) Williams College; Southern Methodist University; Stony Brook University (SUNY); Midwest Macro, Logan, UT.
• Supplementary Material: Technical Appendices, Slides, ATUS/CEX/NIPA Classification Crosswalk

• Status: Model Written; Computational Work Ongoing; Seeking Coauthor(s)
• Abstract:  As the services share of aggregate output in the U.S. has risen, so have high human-capital workers migrated away from rural areas and to cities. Migration patterns are observed despite the fact that the services share of aggregate output in rural areas is similar (and sometimes higher) than the share in urban areas. This is because the mix of service industries which dominate rural economies in the U.S. is generally less productive and requires lower human capital than urban services. Technical change and the human-capital input mix is thus different for rural services versus urban services. I explore how these twin facts about production have contributed to rural brain drain and rural/urban inequality in a multi-sector, multi-region model, where sectors differ by productivities and input/output elasticities and use durable capital and two types of labor (high and low human capital) as inputs. I further endogenize the household decision to acquire education and/or engage in costly migration. The model permits exploration of several questions. First, how have unbalanced technical change across sectors and regions contributed to the geo-spatial distribution of human capital? Second, since migration is costly, the geo-spatial distribution of human capital may be inefficient: what happens to aggregate output (and welfare) if moving costs are subsidized or removed? Third, how much is structural change driven by consumers choosing to take up increasing education? 

• Status: Revising for Management Science
• Abstract:  We propose a unifying theory of two-stage budgeting, mental accounting, and bounded rationality. Inattention reduces the fungibility of money across budgetary mental accounts. Financial attentiveness is cognitively costly, so consumers might re-assess only a subset of spending budgets every period. Over- or under-spending affects future budgeting and expenditure decisions. Using agent-level weekly expenditure data, we structurally estimate how much low-income consumers appear rationally constrained in budgeting, providing insights into how consumers would respond to interventions that encourage budgeting discipline. Attentiveness constraints can have a disciplinary affect on finances: relaxing constraints leads some consumers to over-spend and become financially worse off.
• Presentations: (2022) FUR Conference, Ghent, Belgium; (2021) Columbia University, New York; (2020) INFER (Virtual); NBER-NSF SBIES (Virtual); UCSB, Theory Underground; ARC for Financial Planning, Washington D.C.; (2019) ACR, Atlanta; (2017) INFORMS Marketing Science, Los Angeles.
• Notes: Previous versions of this paper were circulated under the titles Two-stage Budgeting with Bounded Rationality, A Structual Model of Mental Accounting,  and Two-stage Budgeting Under Mental Accounting.

• Status: New Draft!
• Abstract: Theories of the emergence of the Industrial Revolution are myriad, but no agreement exists as to its primary cause. Why did the nature of aggregate economic activity in Europe and its colonies suddenly change from one characterized by Malthusian dynamics to the modern Solow-style growth regime? We propose a theory whereby the introduction of caffeinated beverages altered the labor productivity of workers, as they replaced low-fermented alcoholic beverages with the consumption of coffee and tea as alternatives to dirty water for hydration purposes. The timing of the introduction of coffee and tea to European markets suggests this mechanism as one important cause of the Industrial Revolution. We further add to the literature by building a three-factor production technology that features different land/labor and capital/labor nests. The technology can replicate both Malthusian and Solow-style dynamics with respect to per-capita output growth. It features two different kinds of labor productivity – 1) productivity associated with the land/labor nest; 2) productivity associated with the capital/labor nest. Productivity is endogenous, depending on the consumption choices (e.g., alcohol or caffeine as replacements for water) of consumers, though consumers do not internalize the impact of their consumption choices on productivity. The introduction of caffeine fundamentally changes the nature of productivity growth, causing the capital/labor nest to increasingly become more dominant, leading to Industrial Revolution. We estimate that the transition toward Industrial Revolution began in the UK around 1650.
• Presentations: (2024) SED, Buenos Aires; EWMES, Palma de Mallorca, Spain; Vanderbilt University; University of Barcelona; MEA Meetings, Chicago.
• Supplementary Material: Slides

• Status: Model Written; Computational Work Ongoing; Seeking Additional Coauthor(s)
• Abstract:  In this paper we thus explore a Melitz (2003) style model where consumers have preferences over an infinite menu of consumption products, but firms may not have the ability to produce a certain subset of these products profitably because of either high fixed entry costs or high marginal costs.  As consumers get richer, they become more particular about the types of products they consume, so that as income increases new markets for new products emerge, leading to growth in output which feeds back into generating further income increases. However, while richer consumers may have more refined tastes which demand a more diverse set of consumption options, in order for a market for these new products to exist, the producing firms must be profitable. Thus, along the growth path, consumers may desire a positive amount of certain product types, yet they may not desire enough for the corresponding production sector to be profitable. This is because firms looking to enter the market face fixed costs associated with starting up production. Fixed costs may vary over time as total productivity increases, so that certain epochs are associated with higher rates of new firm entry than others, which can help drive so-called ''growth miracles.''

Dormant Projects

• Abstract: Using endogenous, age-dependent measures of the value of statistical lives (VSL), this paper examines the demographic implications of recessions driven by disease contagions. Depending on the age-distribution mortality profile of the disease, long-run welfare losses resulting from the recession may outweigh lost VSL’s directly attributable to the disease. This is because disease contagions that induce high levels of hospitalization simultaneously impact aggregate output, via a recession caused by social-distancing, and the productivity of health care services. The efficiency of health investment falls driving down life expectancy (LE). VSL’s fall both because LE’s fall and the marginal value of health care investment falls. Using the Hall and Jones (2007) model of age-specific, endogenous health investment, it is shown that the COVID-19 crisis of 2020 will lead to lost welfare for young agents that exceeds VSL’s lost from the disease. If COVID-19 had the same age-mortality profile as the 1918 Spanish Flu, where more young agents died, contagion-mitigation policies that cause deep recessions would still be socially optimal since more of the high-valued lives of young people would be saved.
• Presentations: (2020) Macro-Dev-Trade-Environment Group Meeting, Virtual, Iowa State.

• Abstract: Throughout the 21st century, population aging in the United States will lead to increases in the number of elderly people requiring some form of living assistance which, as some argue, is to be seen as a burden on society, straining old-age insurance systems and requiring younger agents to devote an increasing fraction of their time toward caring for infirm elders. Given this concern, it is natural to ask how aggregate GDP growth is affected by such a phenomenon. We develop an overlapping generations model where young agents face idiosyncratic risk of contracting an old-age disease, like for example Alzheimer's or dementia, which adversely affects their ability to fully enjoy consumption. Young agents care about their infirm elders and can choose to supplement elder welfare by spending time taking care of them. Through this channel, aggregate GDP growth endogenously depends on young agents' degree of altruism. We calibrate the model and show that projected population aging will lead to future reductions in output of 17% by 2056 and 39% by 2096 relative to an economy with a constant population distribution. Curing diseases like Alzheimer's and dementia can lead to a compounded output increase of 5.4% while improving welfare for all agents.
• Press:  Benefits Pro; Who Will Care for All the Old People? VoxEU in: Live Long and Prosper? The Economics of Ageing Populations. (2019); NPR's The Confluence, 90.5 WESA, Pittsburgh (June 30, 2023).
• Presentations: (2019) SNDE, Dallas Fed; XXIV Workshop on Dynamic Macro, Vigo Spain; (2018) UCSB; University of Missouri; Midwest Macro, Madison, WI; SED, Mexico City.

• Abstract: In his 1999 summary of all things mental accounting, Richard Thaler describes one of the primary components of mental accounting as the budgeting of specific utility-providing activities which can depend, but does not have to, on the resources used to fund those activities. The analysis presented in this paper focusses specifically on household expenditure of durable and non-durable goods and the liquidity sources used to fund these different expenditures. Specifically, we exploit a linked dataset of credit and debit card users to examine consumer purchasing patterns of durable and non-durable consumption commodities under both methods of payment. Our findings suggest that on average durable purchases are more sensitive to increases in available credit than non-durable purchases, and most consumers are more likely to increase total consumption due to increases in available credit than increases in available checking account balances. We empirically show that the standard neo-classical consumption/savings model, the equilibrium conditions of which implicitly assume that the household’s available resources (liquidity and investments) are perfectly fungible, fails to rationalize our data for the median/modal consumer in our sample. However, our results are rich because we also show that the behavioral distribution of consumers includes both households which treat liquidity as fungible and those that do not. Given the heterogeneity we find, future work should test whether these results would matter on aggregate.
• Presentations: (2019) ACR, Atlanta; Finance Forum, Madrid; (2018) Boulder Consumer Finance Conference; BDRM, Harvard; SJDM, New Orleans.