Aggregate Demand, Idle Time, and Unemployment
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This paper was previously circulated under the titles “A Theory of Aggregate Supply and Aggregate Demand as Functions of Market Tightness with Prices as Parameters” and “A Model of Aggregate Demand and Unemployment”. We thank George Akerlof, Andrew Atkeson, Paul Beaudry, Francesco Caselli, Varanya Chaubey, James Costain, Wouter den Haan, Peter Diamond, Emmanuel Farhi, Roger Farmer, John Fernald, Xavier Gabaix, Yuriy Gorodnichenko, Pierre-Olivier Gourinchas, Philipp Kircher, David Lagakos, Etienne Lehmann, Alan Manning, Emi Nakamura, Maurice Obstfeld, Nicolas Petrosky-Nadeau, Franck Portier, Valerie Ramey, Pontus Rendhal, Kevin Sheedy, Robert Shimer, Stefanie Stantcheva, Jón Steinsson, Silvana Tenreyro, Carl Walsh, Johannes Wieland, Danny Yagan, four referees, the Editor Robert Barro, and numerous seminar and conference participants for helpful discussions and comments. This work was supported by the Center for Equitable Growth at the University of California Berkeley, the British Academy, the Economic and Social Research Council [grant number ES/K008641/1], the Banque de France foundation, the Institute for New Economic Thinking, and the W.E. Upjohn Institute for Employment Research. The views expressed herein are those of the authors and do not necessarily reflect the views of the National Bureau of Economic Research.