Research

Research Interests

macroeconomics, networks, firm and industry dynamics, information frictions, search and matching theory, business cycles

Abstract. We study innovation in evolving knowledge networks and its growth implications. Empirically, a new link in the knowledge network is approximated as the first citation between a pair of technology categories. We find that these new links likely connect high-quality innovations and large firms on both ends. After forming a new link, responsible firms’ innovation and real performance improve on both ends with positive spillovers to other firms. We build a tractable model to rationalize these findings and analytically characterize the stationary equilibrium. In the model, the knowledge network evolves endogenously as each firm searches for others as knowledge input suppliers and attracts others as users of its own knowledge. In equilibrium, faster growth is associated with denser and better knowledge networks. Endogenous link formation amplifies the effect of innovation incentives on growth. The calibrated model suggests that the majority of growth in the US has network origins.

An Empirical Spatial Search Model of Frictional Intermediation (with Fei Li, Charles Murry, and Yiyi Zhou) draft available upon request

Abstract. We develop and estimate a spatial search-and-bargaining model to analyze the role of spatial and dealer heterogeneity in decentralized markets. Transactions occur between sellers and buyers directly and through dealers, within and across locations. Trading activities in one location influence trade opportunities in other locations, creating a network of interconnected markets with cross-location externalities. We estimate the model using data from the Ohio used-car market and find that dealers are more likely to trade higher-valued cars than private sellers at a price premium. We conduct two counter- factual analyses: (1) eliminating spatial heterogeneity in matching technology to lower search frictions and (2) assessing CarMax’s entry into a ”core” location to intensify dealer competition. Both cases lead to imbalanced impacts on price, transaction volume and speed, and product selection across locations. Reducing search frictions or increasing competition benefits agents in some locations while hurting others.

Inventory Management in Decentralized Markets (with Fei Li, Charles Murry, and Yiyi Zhou), International Economic Review, Volume 65, Issue1, February 2024, Pages 431-470.
Learning and Firm Dynamics in a Stochastic Equilibrium, the Journal of Economic Theory, Volume 203, July 2022, 105486.
Input-Output Linkages in Pigouvian Industrial Fluctuations, Journal of Monetary Economics, Volume 117, January 2021, Pages 1078-1095. pre-print version.
Firm-Level Entry and Exit Dynamics Over the Business Cycles, also see the old version. European Economic Review, Volume 102, February 2018, Pages 298-326.
Riskiness, Endogenous Productivity Dispersion and Business Cycles, Journal of Economic Dynamics and Control, Volume 57, August 2015, Pages 227–249. slides.
Directed Search and Job Rotation (with Fei Li), the Journal of Economic Theory, Volume 148, Issue 3, May 2013, Pages 1268–1281.