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Research Interest
Research Papers
heterogeneous households to study the impact of tax reform on labor supply and income inequality across
education groups. Households differ in their education level and their time preference. The response of labor
supply to tax reform is studied both at the intensive margin (hours worked) and the extensive margins (labor force
participation). The quantitative results suggest that: (i) a tax reform which decreases the marginal tax rate by the
same magnitude of that in the Tax Reform Act of 1986 (TRA-86), has a significant impact on households' labor
supply and that approximately 65 percent of the aggregate labor supply response is along the extensive margin;
(ii) household labor supply response to tax reform depends on education levels. People with less education
respond more significantly along both the intensive and extensive margin while the response of people with
highest education is subtle. However, the income share of the highest education group increases due to an
increase in capital income after tax reform. These assertions are consistent with the empirical literature studying
the effects of TRA-86 on labor supply.
intermediate inputs and adjustment costs for capital and housing. The quantitative results replicate three main
features of the housing market over the business cycle. First, GDP, consumption, investment in the business
sector, and residential investment move in the same direction over the business cycle. Second, residential
investment is two times more volatile than the investment in the business sector. Third, I find a positive
correlation between house prices and residential investment—a result rarely observed in models without
demand side shocks.
Researches in Progress
and wealth. To achieve this, I introduce a frictional good, which is allocated through directed search in the
product market, into the incomplete market model, i.e., the Aiyagari (1994) model. Directed search distinguishes
households by their willingness to pay which depends on the asset holdings of the households. Therefore, the
existence of the frictional good provides households an additional incentive to save. I first prove the existence of
a stationary equilibrium and follow it by quantifying the impact of the frictional good on household consumption,
savings, income distribution, and risk sharing.
spending multiplier during business cycles. We finds that the government spending multiplier is large We
examine changes in the government spending multiplier over the past 30 years.
Researches in Chinese
the model by using China 1981-2008 annual data. The model shows that the impact of technology shock and
news shock on the fluctuations in aggregate output are of the same magnitude. To be specific, news shock
explains 55 percent of the changes in the volatility of the aggregate output while technology shock accounts
for 45 percent of the changes.
- Macroeconomics
- Fiscal Policy
- Market Frictions
- Business Cycle
- Housing Market
Research Papers
- Labor Supply Response to Tax Reform in a Search Model with Heterogeneous Households (job market paper) Download paper
- I develop a dynamic general equilibrium model with progressive taxation,
heterogeneous households to study the impact of tax reform on labor supply and income inequality across
education groups. Households differ in their education level and their time preference. The response of labor
supply to tax reform is studied both at the intensive margin (hours worked) and the extensive margins (labor force
participation). The quantitative results suggest that: (i) a tax reform which decreases the marginal tax rate by the
same magnitude of that in the Tax Reform Act of 1986 (TRA-86), has a significant impact on households' labor
supply and that approximately 65 percent of the aggregate labor supply response is along the extensive margin;
(ii) household labor supply response to tax reform depends on education levels. People with less education
respond more significantly along both the intensive and extensive margin while the response of people with
highest education is subtle. However, the income share of the highest education group increases due to an
increase in capital income after tax reform. These assertions are consistent with the empirical literature studying
the effects of TRA-86 on labor supply.
- House Prices, Intermediate Inputs and Sectoral Co-movement in the Business Cycle
intermediate inputs and adjustment costs for capital and housing. The quantitative results replicate three main
features of the housing market over the business cycle. First, GDP, consumption, investment in the business
sector, and residential investment move in the same direction over the business cycle. Second, residential
investment is two times more volatile than the investment in the business sector. Third, I find a positive
correlation between house prices and residential investment—a result rarely observed in models without
demand side shocks.
Researches in Progress
- Consumption, Saving and Income Distribution with Incomplete Market and Search Frictions in the Goods Market
and wealth. To achieve this, I introduce a frictional good, which is allocated through directed search in the
product market, into the incomplete market model, i.e., the Aiyagari (1994) model. Directed search distinguishes
households by their willingness to pay which depends on the asset holdings of the households. Therefore, the
existence of the frictional good provides households an additional incentive to save. I first prove the existence of
a stationary equilibrium and follow it by quantifying the impact of the frictional good on household consumption,
savings, income distribution, and risk sharing.
- The Government Spending Multiplier of China during Business Cycles" (with Ziguan Zhuang)
spending multiplier during business cycles. We finds that the government spending multiplier is large We
examine changes in the government spending multiplier over the past 30 years.
Researches in Chinese
- News Shock and the Business Cycle: the Case of China" (with Ziguan Zhuang and Xiaojun Zhao)
the model by using China 1981-2008 annual data. The model shows that the impact of technology shock and
news shock on the fluctuations in aggregate output are of the same magnitude. To be specific, news shock
explains 55 percent of the changes in the volatility of the aggregate output while technology shock accounts
for 45 percent of the changes.
