We study supply and demand shocks in a general disaggregated model with multiple sectors, multiple factors, input-output linkages, downward nominal wage rigidities, credit-constraints, and a zero lower bound. We use the model to understand how the Covid-19 crisis, an omnibus of supply and demand...

We present a theory of Keynesian supply shocks: supply shocks that trigger changes in aggregate demand larger than the shocks themselves. We argue that the economic shocks associated to the COVID-19 epidemic--shutdowns, layoffs, and firm exits--may have this feature. In one-sector economies...

The rigid-nominal-wage aggregate supply curve is not exactly upward sloping but kinked. For that reason, a demand expansion does not involve an increase but a decrease in employment level and output volume. This problem is due to the theoretical representation of the labor market which is...

We investigate the implications of experienced-based learning on consumption-saving and labor supply, two fundamental decisions in business cycle models. Using the Dutch Household Survey, we find that individuals who have experienced higher national unemployment rates over their lifetime save...