"The gentle accent moves me forward, with secrets that I know were true."
Working Papers Labor Participation, Human Capital Accumulation, and the Business Cycle [Paper] With Rosemary Kaiser -- In a quantitative life-cycle model with endogenous labor participation, we find that providing subsidies for job search among the elderly population can enhance overall welfare
Artificial Intelligence, Data Corruption, and Labor Displacement [Paper] -- Will AI put us out of work? Not as alarming as it sounds, as the usefulness of AI depends on how good the data is, and the adoption of AI could potentially depress the quality of data -- Extra readings for the interested: Training on generated data makes model forget; Self-consuming generative model go MAD.
The Great Resignation and Optimal Unemployment Insurance [Paper][CEPR WP] WithJonathan Heathcote --Optimal design of unemployment insurance during the era of Great Resignation, when many workers quit their jobs
Financial Development and Housing Kuznets Curve [Paper] With Feng Dong and Haoning Sun --We document that house price-to-rent ratio first increases then decreases with financial development. A simple model of financial frictions with a land sector can account for this pattern.
Self-fulfilling Resignation: Business Cyle and Policy Implications [Paper] --Can people quit their jobs because they expect others are doing the same? Yes and this has new business cycle and policy implications
Published/Accepted Papers Public Disclosure and Private Information Acquisition: A Global Game Approach [Slides][Paper][Publisher Site] Cai, Zhifeng and Feng Dong, 2023. Journal of Economic Theory, 210: 105670 -- Global game refinement leads to surprising prediction regarding how public information release affects private incentives to acquire information
College Tuition and Income Inequality [Slides][Paper][Publisher Site] Cai, Zhifeng, and Jonathan Heathcote. 2022.American Economic Review, 112 (1): 81-121 -- In a micro-founded college equilibrium model we show that rising income inequality in the past decades has quantitatively significant impact on college tuition
Secular Stagnation, Financial Frictions, and Land Prices [Slides][Paper][Publisher Site] Cai, Zhifeng. 2021.Journal of Monetary Economics, 124: 66-90 -- Temporary but large financial shocks can lead to persistent slumps in real-estate prices, creating a secular stagnation similar to the post-GFC experience
A Model of Secular Migration from Centralized to Decentralized Trade [Paper][Publisher Site] Cai, Zhifeng, and Feng Dong. 2021. Economic Theory, 72: 201-244 --The title is self-explanatory
Dynamic Information Acquisition and Time-Varying Uncertainty [Paper][Publisher Site][Appendix] Cai, Zhifeng. 2019. Journal of Economic Theory, 184: 104947 -- Information acquisition activities could amplify the impact of uncertainty shocks in a dynamic trading environment
Works in Progress College Reputation and Efficient Admission Policies With Jonathan Heathcote
Older Working Papers How do Financial Frictions affect Self-financing Firms? [Paper] with Kai Ding