Thomas Zhang

I study a real business cycle economy whose rental and wage adjust toward clearing values at different finite speeds, so the short side of each factor market is rationed at posted prices. A firm with a thin profit share demands factors far more elastically than the household supplies them, so supply caps a boom and demand deepens a bust. Calibrated to wage durations and a plant survey of binding inputs, the friction generates involuntary unemployment, a countercyclical labor share, a bust-heavy cycle with thick tails and faster recoveries, procyclical left-skewed utilization, and an acyclical real wage, without search or nominal rigidity.

JEL: E32, E24, D50, E13, D24

This paper develops a model of endogenous moral formation. In a two-stage game, players first choose moral functions assigning value judgments to actions, then select actions. Two motives drive moral choice: the influencing-outcome motive leads players to praise actions that benefit themselves; the self-righteous motive leads them to praise their own planned actions. Large moral weights support any homogeneous outcome through self-fulfilling moral functions; heterogeneous outcomes require that no homogeneous alternative strictly Pareto dominates them. Applications include cooperation in the Prisoner's Dilemma, equilibrium selection in coordination games, status-seeking consumption, and internalization of values that favor powerful players.

JEL: C72, D64, D62, Z13

This paper examines how lobbying affects economic efficiency through a dynamic model of endogenous policy influence. Firms with heterogeneous productivity engage in Cournot competition and may lobby for output subsidies, with larger, more productive firms lobbying more intensively. While conventional views emphasize lobbying's distortionary effects, the model shows that it can enhance aggregate productivity by reallocating resources toward underproducing high-productivity firms. The productivity gains are most pronounced in competitive industries, where lobbying disproportionately benefits efficient producers. However, lobbying also creates inter-industry distortions by favoring concentrated sectors regardless of their efficiency. The model further explains rising markup skewness, as subsidies expand output from productive firms while compressing rivals' margins. Preliminary calibration suggests that lobbying increases GDP by 1.4%, indicating net welfare gains from correcting misallocation.