Contact Information

Department of Economics, Northwestern University
2211 Campus Drive
Evanston, IL 60208

Phone: 215-370-8259
e-mail: cebohr@u.northwestern.edu

Education

Ph.D., Economics, Northwestern University, 2024 (expected)
MA, Economics, Northwestern University, 2018
BA, Economics, University of Virginia, 2017
BA, Physics, University of Virginia, 2017

Primary Fields of Specialization

Macroeconomics: Monetary Economics and Economic Growth

Curriculum Vitae

Job Market Paper

Capacity Buffers: Explaining the Retreat and Return of the Phillips Curve

Why did the Phillips curve gradually flatten since the 1960s, and what explained its sudden steepness in the goods sector during the COVID-19 pandemic? Firms face capacity constraints in production and hold excess capital to buffer against fluctuations in demand. The capacity buffer’s size influences both the pass-through of demand fluctuations into sales and the sensitivity of a firm’s pricing decisions to any realized changes in demand. Over the same time period as the flattening of the Phillips curve, firms’ variable cost shares declined, capacity buffers rose, and idiosyncratic volatility of sales rose. This paper argues that the reduction in firms’ variable cost shares induced firms to hold larger capacity buffers, which in turn increased the volatility of firm sales and flattened the Phillips Curve. The recent steepness of the Phillips curve in the goods sector arose from a collapse in the size of firms’ effective capacity buffers, which was the result of the health precautions that increased the demand for goods and restricted production capacity.

Working Papers

Engel’s Treadmill: A Theory of Balanced Growth and Perpetual Sectoral Turnover
with Martí Mestieri and Emre Enes Yavuz

Modern economic growth is characterized by constant growth in income per capita and secular sectoral changes in the composition of the economy. We develop an endogenous growth model with directed technical change across sectors where these two facts emerge endogenously in equilibrium. Along the aggregate balanced growth path, there is perpetual unbalanced growth across sectors due to the two-way interaction between increasing income and directed technical change towards more income-elastic sectors. We refer to this perpetual process as Engel’s Treadmill. To model agents’ preferences, we introduce the heterothetic Cobb-Douglas (HCD) demand system, which allows us to isolate the market size effect driving this two-way interaction: HCD is the only demand system in which differences in expenditure shares are solely due to differences in income levels. We provide a sharp characterization of the sectoral dynamics of the model and evidence in favor of its predictions. For example, using disaggregated US price series since 1957, we show that sectoral prices have, on average, fallen more in more income-elastic sectors. We also fully characterize the sectoral dynamics when both price and income effects are present, and show that the same qualitative sectoral patterns emerge.

Heterothetic Cobb-Douglas: Theory and Applications (CEPR Discussion Paper, 2023)
with Martí Mestieri and Frédéric Robert-Nicoud

Aggregation and Closed-Form Results for Nonhomothetic CES Preferences (CEPR Discussion Paper, 2023)
with Martí Mestieri and Emre Enes Yavuz

A Behavioral Study of Roth versus Traditional Retirement Savings Accounts (ZH Working Paper, 2023)
with Charles A. Holt and Alexandra V. Schubert

Published Work

Assisted Savings for Retirement: An Experimental Analysis (European Economic Review, 2019)
with Charles A. Holt and Alexandra V. Schubert

Work in Progress

What Caused the Great Moderation? A Resizing of Firms’ First and Second Lines of Defense
with Bence Bardóczy, Michael Cai, and Harrison Snell

The dampened volatility of investment and inventories, a hallmark characteristic of the Great Moderation, is a trend that has continued past the Great Recession. Over the same time period, there has been a decline in the inventory to sales ratio and a rise in excess production capacity. This paper builds on the production capacity buffer framework of Bohr (2023) where firms hold excess production capacity to buffer against surges in demand. The theory is expanded to include inventories, which similarly act as a buffer against increases in demand. The size of a firm’s capacity and inventory buffers influence the sensitivity of its investment and production decisions. Given these buffer-dependent nonlinearities, the model is implemented in a heterogeneous firm framework with persistent idiosyncratic demand shocks to get accurate implications for aggregate dynamics. The substantial increase in the size of firms’ capacity buffers, their “second line of defense”, lessened the need for inventory buffers, their “first line of defense”, thereby reducing firms’ inventory to sales ratios. This resulted in a dampening of the investment accelerator and the inventory-cycle, bringing about the Great Moderation. The model can also account for the highly volatile inventory cycle of the COVID-19 pandemic despite occurring during a time period marked by otherwise muted inventory dynamics.

Teaching Evaluations (International Finance, Money and Banking)

References

Prof. Lawrence J. Christiano (Committee Chair)
Prof. Martí Mestieri
Prof. Matthew Rognlie