Related papers: Not-so-Cleansing Recessions
The storage effect is a well-known explanation for coexistence in temporally varying environments. Like many complex ecological theories, the storage effect is often used as an explanation for observed coexistence on the basis of heuristic…
This paper develops an algorithm for detecting US recessions in real time. The algorithm constructs hundreds of millions of recession classifiers by combining unemployment and vacancy data. Classifiers are then selected to avoid both false…
This paper develops a new model of business cycles. The model is economical in that it is solved with an aggregate demand-aggregate supply diagram, and the effects of shocks and policies are obtained by comparative statics. The model builds…
The origin of economic crises is a key problem for economics. We present a model of long-run competitive markets to show that the multiplicity of behaviors in an economic system, over a long time scale, emerge as statistical regularities…
Biological systems perform complex multi-step processes in a reproducible way despite underlying stochasticity. The standard explanation is micromanagement by molecular machinery that recognizes and corrects specific errors. Here we study…
We document the rise of negative earnings between 1980 and 2019: a secular increase in the percent of firms reporting losses, both among public firms and in the broader universe of US corporations, and a secular increase in the persistence…
We propose a simple quantitative model of Schumpeterian economic dynamics. New goods and services are endogenously produced through combinations of existing goods. As soon as new goods enter the market they may compete against already…
We propose a means to relate properties of an interconnected system to its separate component systems in the presence of cascade-like phenomena. Building on a theory of interconnection reminiscent of the behavioral approach to systems…
Using a set of heterogeneous competing systems with intra-system cooperation and inter-system aggression, we show how the coevolution of the system parameters (degree of organization and conditions for aggression) depends on the rate of…
It is widely assumed that increases in economic productivity necessarily lead to economic growth. In this paper, it is shown that this is not always the case. An idealized model of an economy is presented in which a new technology allows…
Complex adaptive systems have been the subject of much recent attention. It is by now well-established that members (`agents') tend to self-segregate into opposing groups characterized by extreme behavior. However, while different social…
As countries develop, the relative importance of agriculture declines and economic activity becomes spatially concentrated. We develop a model integrating structural change and regional disparities to jointly capture these phenomena. A key…
The 2008 global financial crisis marked the beginning of a decade dominated by fiscal austerity policies in much of the developed world. This paper presents a qualitative narrative review of an extensive collection of academic literature to…
I develop a dynamic model of how internal capital markets in conglomerates respond to liquidity shocks when affiliated firms vary in innovation potential. A two-stage framework defines cutoff rules for when the conglomerate should liquidate…
The transient fluctuation of the prosperity of firms in a network economy is investigated with an abstract stochastic model. The model describes the profit which firms make when they sell materials to a firm which produces a product and the…
Homophily and heterophobia, the tendency for people with similar characteristics to preferentially interact with (or avoid) each other are pervasive in human social networks. Here, we develop an extension of the mathematical theory of urban…
In recent years, it has been debated whether a reduction in working hours would be a viable solution to tackle the unemployment caused by technological change. The improvement of existing production technology is gradually being seen to…
Automation raises productivity and reduces paid human labor, but it also reallocates income and ownership claims. This paper studies that tradeoff in a static benchmark and in a stationary heterogeneous-agent general equilibrium. Firms…
Labor market institutions are central for modern economies, and their polices can directly affect unemployment rates and economic growth. At the individual level, unemployment often has a detrimental impact on people's well-being and…
This paper examines the dynamic interaction between falling and rising markets for both the real and the financial sectors of the largest economy in the world using asymmetric causality tests. These tests require that each underlying…