Research

This paper studies the role of worker mobility and labor market institutions on the diffusion of radical technologies. I propose a theory with two-sided heterogeneity in which firms and workers accumulate technology-specific expertise through mutual learning, and worker mobility is subject to search frictions. When existing knowledge is only partially transferable to new technologies, the reallocation of experienced workers becomes central to their diffusion. I calibrate the model to U.S. labor markets using predictive AI as a particular application, matching empirical patterns on technology adoption and poaching of skilled workers with comprehensive microdata from LinkedIn. I then analyze the transition dynamics of introducing a radical new technology. Initially, scarcity of expertise forces firms to adopt internally using inexperienced workers. As diffusion progresses, the constraint on experienced labor relaxes, accelerating adoption through the poaching of workers and generating an S-shaped diffusion curve. Aggregate output follows a J-curve pattern, with growth remaining sluggish initially before accelerating as productivity gains materialize. Poaching accounts for up to 60% of adoption, with its contribution peaking during the acceleration phase. A counterfactual exercise re-calibrated to European-style labor markets yields modestly higher steady-state output relative to the U.S., while increasing the half-life of adoption by two-thirds and reducing welfare gains from the radical new technology by one-third.

We measure the effect of deficits on inflation using a "high frequency narrative approach". We identify an event that released news about the 2021 deficits — the Georgia Senate election runoff — and size the shock using new narrative data from investment banks. We then study the high frequency response of inflation forecasts from asset prices. We estimate that the price level was expected to increase by 22-38 basis points over 2021-22, meaning the 2021 deficits caused a significant share of the 2021-22 inflation. Standard models — such as the Fiscal Theory of the Price Level and the heterogeneous agent New Keynesian model — match the inflation response.

The large spike at zero in the distribution of year-to-year nominal wage changes in household surveys is often seen as evidence of nominal wage rigidity. But measurement error — especially from workers rounding their reported wages — can exaggerate this spike. Using U.S. Current Population Survey data, we adjust for potential rounding behavior and find that the zero-change spike falls from 15-20 percent to 7-12 percent, aligning closely with recent estimates from administrative data.

This paper proposes a robust and efficient method of solving models with endogenous borrowing constraints and strategic default in continuous-time. Using a change of variable the free-boundary problem is transformed into a boundary value problem on a fixed domain in which default thresholds enter explicitly as endogenous variables. Default thresholds can then be solved using algorithms that are analogous to solving for the fixed point of prices in standard general equilibrium models. I demonstrate the approach using two sovereign default models featuring short-term and long-term debt, respectively. At last, I show how the method can be applied to time-dependent problems featuring transition dynamics.

This paper studies the implications of the emergence of dominant firms for aggregate market power and the growth of small fringe firms. The greater visibility of large sellers endows them with a matching advantage in the product market which they use to charge high markups. Long-run competitive forces discipline the behaviour of a granular seller and in a natural benchmark model firm dynamics of fringe firms are neutral under the presence of a large seller. I then present an extension in which the presence of the granular seller raises aggregate markups, lowers the growth of the most productive firms and slows down the reallocation of customers from unproductive to productive sellers. This sheds light on a new mechanism of how dominant firms could shape the aggregate behaviour of the macroeconomy.