"Testing for Keynesian Labor Demand," with Ben Malin, Federal Reserve Bank of Minneapolis. Wednesday, October 31, 4:10 PM-5:30 PM, 368A Heady Hall.

Ben Malin joined the Federal Reserve Bank of Minneapolis as a senior economist in 2012, after spending 6 years as an economist at the Federal Reserve Board of Governors. His current research focuses on firms' price-setting behavior, business cycles, and economic growth. Ben's work has appeared in the Handbook of Monetary Economics, American Economic Review, Journal of Public Economics,and other journals. Ben holds a B.S. in economics from Iowa State University and a Ph.D. in economics from Stanford University.

Abstract: According to the textbook Keynesian model, short-run demand for labor is sensitive to the demand for goods. In this view, sellers deviate from setting the marginal product of labor proportional to the real wage, instead enduring or choosing lower price markups when demand for goods is high. We test this prediction across U.S. industries in the two decades up through the Great Recession. To identify movements in goods demand, we exploit how durability varies across 70 categories of consumption and investment. We also take into account the flexibility of prices and capital-intensity of production across goods. We find evidence in support of Keynesian Labor Demand.

This seminar honors the memory of Charlie Sivesind, a 1975 PhD in the Department of Economics at Iowa State University. Charlie was a visiting assistant professor in this department during the 1974-75 academic year. He also taught courses at Fordham, Colombia, New York, and Pace Universities. From 1975 until early 1979 he worked as an economist with the Federal Reserve Bank of New York. From the time he left the New York Fed until his death, he was employed as a financial economist by Morgan Stanley & Co. During the five years of his professional life, Charlie became a well-known and highly respected monetary economist. In 1977, he won the Abram Award of the National Association of Business Economists for applied economic research.