A Model of Aggregate Demand and Unemployment
---- Acknowledgements -----
This paper was previously circulated under the title "A Theory of Aggregate Supply and Aggregate Demand as Functions of Market Tightness with Prices as Parameters." We are deeply indebted to George Akerlof for his comments and suggestions. We thank Wouter den Haan, Peter Diamond, Emmanuel Farhi, Roger Farmer, Yuriy Gorodnichenko, Greg Kaplan, Phillip Kircher, Camille Landais, Etienne Lehmann, Kristof Madarasz, Alan Manning, Emi Nakamura, Nicolas Petrosky-Nadeau, Pontus Rendhal, Kevin Sheedy, Jon Steinsson, Etienne Wasmer, Danny Yagan, and numerous seminar and conference participants for helpful discussions and comments. Financial support from the Center for Equitable Growth at the University of California Berkeley and from the Fondation Banque de France is gratefully acknowledged. Michaillat is grateful to the W.E. Upjohn Institute for Employment Research for its financial support through Early Career Research Grant #12-137-09. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.