Upcoming Seminars

(Fall 2023) FRB Philadelphia, Goethe University Frankfurt, University of Bristol, University of Warwick, University of Manchester

Working Papers

Time-use, Growth, and Structural Change

• Status: Under Review
• Abstract: A recent literature has provided empirical evidence that markups are increasing and are heterogeneous across firms. In standard monopolistic competition models, such heterogeneity implies inefficiency even in the presence of free entry. We enrich the standard model of monopolistic competition with heterogeneous firms to incorporate off-market time use that is non-separable with market consumption into the consumer problem. Within this framework the constancy of equilibrium markups is neither sufficient nor necessary for efficiency. Whether or not the competitive level of production and market concentration of firms are efficient depends on the degree to which consumption time and market goods are complements or substitutes. Such inefficiencies are the result of time use being misallocated toward home production at the expense of market production.

• Status: Under Review
• Abstract: Consumers allocate both income toward consumption of goods and services and off-market time toward activities using either goods or services. A model with time to consume embeds rich income effects, which has implications for the causal mechanism driving the rise in the services share of expenditure in the U.S. We estimate that consumers increasingly treat goods as luxuries relative to services, and this may result from the fact that the relative efficiency of using goods versus services, from the perspective of the consumer, has improved. Examining structural change through the model’s lens, the rise in the services share of U.S. expenditure over the last 70 years is primarily attributable to the decline in the relative price of goods to services.
• Presentations: (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.
• Notes: Some components of this draft were previously circulated under the titles The Evolution of the Consumption Experience: Why the Services Share Has Risen, Home Production with Time to Consume, and Structural Change Under Home Production with Time to Consume. This draft focusses on how changes to the consumption experience, as measured by off-market time use patterns, have contributed to the rising services share of expenditure.
• Supplementary Material: Technical Appendices

• Abstract: I construct a measure of consumption/leisure inequality from a model featuring Becker (1965) home production. Consumers simultaneously allocate liquid resources toward many different market purchases and time toward both market tasks (labor) and many different off-market activities. Each activity is uniquely associated with products purchased from the market. I use micro data on household time use and spending to quantify the degree to which households across the income distribution value the activities in which they spend time consuming. This measure is fundamentally different from a classic expenditure measure because it accounts for a household’s simultaneous decision to allocate both liquid resources and time toward specific consumption activities. Model-implied dispersion is 3 to 7 times lower than that implied directly by expenditure data and over 2.5 to 5.5 times lower than that implied by wages.
• Presentations: (2023) 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

Health Macro

• Status: Under Review
• Abstract: We explore several possible avenues which have driven the rise in aggregate U.S. health- services prices since the mid-twentieth century. Our multi-sector general equilibrium model is structural change meets health macro, featuring endogenous population aging, market concentration in the health sector, and differential rates of sectoral technological change. The rise in the relative price of health services is almost exclusively a result of increasing market concentration in the health services sector, as well as slow health-sector TFP growth. Rising health prices have had no impact on life expectancy. Further, our results partially challenge the idea that population aging is responsible for dampening GDP growth rates. While health-sector TFP grows slowly, this is offset by gains to the efficiency of converting health investment to healthy outcomes which leads to increases in expenditure and higher rates of GFP growth.
• Presentations: (2023) University of Wuerzburg, Germany; UCSB, LAEF 2nd Labor Markets and Macroeconomic Outcomes Conference; FRB, Cleveland.
• Notes: A previous version was circulated under the title The Causal Factors Driving the Rise in Health Services Prices.

• 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).
• Presentations: (2019) SNDE, Dallas Fed; XXIV Workshop on Dynamic Macro, Vigo Spain; (2018) UCSB; University of Missouri; Midwest Macro, Madison, WI; SED, Mexico City.

Public Finance

• Status: Under Review
• Abstract: Policies promoting residential solar system adoption are designed assuming the associated generation displaces retail electricity purchases on a one-for-one basis. This assumption is not innocuous; electricity from residential solar systems is unlikely to be perfectly substitutable with grid electricity. We estimate a model of U.S. residential electricity demand allowing for spatial heterogeneity and imperfect substitution between forms of electricity to quantify the implications for green energy subsidization. We find subsidies inducing one kWh of residential solar electricity demand displace only 0.5 kWh of grid consumption. As emissions reduction policy, subsidies had national abatement costs of $332 per MTCO2 in 2018.
• Presentations: (2022) University at Albany (SUNY); SED, Madison, WI.
• Supplementary Material: Technical Appendices
• Notes: A previous version of this paper was circulated under the title An Aggregate Perspective on the Geo-spatial Distribution of Residential Solar Panels.

Behavioral Models

Two-stage Budgeting with Bounded Rationality. (2023). (joint with Christopher Y. Olivola and Alan Montgomery). 

• Abstract: We construct a unifying theory of two-stage budgeting and bounded rationality with mental accounting features. Mental accounting and rational inattention induce behavioral wedges between first-stage and second-stage expenditure budgets, reducing the fungibility of money across accounts. Because reviewing one's financial activities is cognitively costly, consumers might re-assess only a subset of their spending budgets every period. Over- or under-spending affects future budgeting and expenditure decisions. We apply latent Bayesian inference to agent-level weekly expenditure data in order to structurally estimate the degree to which low-income consumers appear rationally constrained with respect to budgeting. Our findings provide insight into how consumers may respond to interventions that encourage more disciplined budgeting behavior, like push notifications in budgeting apps. We show that if financial attentiveness constraints are relaxed, consumers who want but fail to discipline their expenditure may 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.
• Supplementary Material: Technical Appendices
• Notes: Previous versions of this paper were circulated under the titles, A Structual Model of Mental Accounting  and Two-stage Budgeting Under Mental Accounting.

• Status: Dormant
• 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.