Lintong Li
|
Welcome to my website!
I am a Ph.D. Candidate in Economics at Princeton University. I work on macroeconomics. I am particularly interested in the macroeconomic implications of micro-level frictions in the presence of heterogeneous households/firms and secular trends of time allocation along economic development. I will be on the academic job market in Fall 2023 / Spring 2024. Here is my CV. Email: [email protected] |
Research Papers |
Aggregate Demand and Irreversible Investment ( job market paper ) [Paper] [Slides]
This article studies the propagation of aggregate shocks through the interaction between financial frictions and the partial irreversibility of fixed capital and relevant policies. In response to adverse shocks to the level of revenue productivity, firms find it costly to shrink since fixed capital is partially irreversible. This limits cash flow from liquidating fixed capital and tightens the financing constraint on working capital. Insufficient working capital further lowers marginal product of capital and triggers additional fire sales when the marginal value of liquid wealth is high. Credit spreads and default risks rise given unbalanced and unprofitable production. Misallocation and extra default lead to additional output loss and lower capital prices. In the presence of monopolistic competition, lower aggregate demand(output) enters revenue productivity and creates an endogenous feedback loop. I provide empirical evidence consistent with the model at the firm, sector, and aggregate level. Quantitative results show that 2 percent TFP shock generates a maximum of 3.9 percent drop in output. A counter-cyclical fiscal policy can mitigate the recession by boosting aggregate demand, resulting from a rich interaction between liquidity, asset price, and financial frictions.
Richer and Busier? The Facts, Causes and Consequences of Labor Supply in China [Paper] [Slides], with Qing Huang
We document the trend in time allocation in China from 2008 to 2020. Market hours per person increase by 3 to 6 hours per week in the urban area but decrease by 4 hours in the rural area, and both changes are mainly driven by the intensive margin. Chinese on average spend much less time on core housework but allocate more time to child care compared with a decade ago. For salary workers, the increase in market hours is broad-based across age, education attainment, gender, sector, and income percentile. Puzzling, even though wage rate and market hours are strongly negatively correlated in cross sections, a substantial rise in market hours is accompanied by a 60-percent increase in wage rate over time. To reconcile this tension, we build a quantitative life cycle heterogeneous agent incomplete market model with home production and pay-as-you-go pension transfer to conduct an accounting. Quantitatively, we find rising income uncertainty, changing demographic structures, and capital augmenting productivity growth in home production contribute to explaining rising market hours. The calibrated model can recover the observed empirical trend in market hours, non-market hours, and the correlation between market hours and wage rate reasonably well.
