讲座：Capacity Underutilization and Demand Driven Business Cycles
题 目：Capacity Underutilization and Demand Driven Business Cycles
嘉 宾：Tiancheng Sun, PhD Candidate, London School of Economics
主持人：许志伟 副教授 上海交通大学安泰经济与管理学院
时 间：2019 年 12 月 26 日（周四）14:30-16:00
地 点：上海交通大学 徐汇校区包图 A407
I propose a macroeconomic model where firms hold capacity to compete for buyers, who are not fully attentive to price differences and thus search for capacity in a somewhat random way. The capacity competition among firms leads to long term capacity underutilization for production. Demand naturally drives business cycles as a result. A shock to consumption demand generates a large movement in investment, an acyclical real wage rate, and a pro-cyclical Solow residual. Estimation results indicate that the single consumption demand shock can already explain most of the business cycle fluctuations.
Tiancheng Sun is a PhD candidate from the London School of Economics. His primary research interest is to understand the causes of business cycles. His job market paper focuses on the role of demand in driving business cycles. The standard New Keynesian literature makes demand important by assuming sticky prices. In his job market paper, by contrast, prices are perfectly flexible but capacity is generally underutilized. Firms need to invest in capacity to compete for buyers. The capacity competition among firms leads to long term capacity underutilization for production. He shows that when there are some idle resources in the economy, demand turns out to be the main driving force of business cycles.