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   Mian, Atif; Straub, Ludwig; Sufi, Amir (March 2021, The Quarterly Journal of Economics)

   Abstract We propose a theory of indebted demand, capturing the idea that large debt burdens lower aggregate demand, and thus the natural rate of interest. At the core of the theory is the simple yet underappreciated observation that borrowers and savers differ in their marginal propensities to save out of permanent income. Embedding this insight in a two-agent perpetual-youth model, we find that recent trends in income inequality and financial deregulation lead to indebted household demand, pushing down the natural rate of interest. Moreover, popular expansionary policies—such as accommodative monetary policy—generate a debt-financed short-run boom at the expense of indebted demand in the future. When demand is sufficiently indebted, the economy gets stuck in a debt-driven liquidity trap, or debt trap. Escaping a debt trap requires consideration of less conventional macroeconomic policies, such as those focused on redistribution or those reducing the structural sources of high inequality. 

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   Hess, Henry (August 2021, Nature Materials)

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3. Endogenous Inverse Demand Functions

   https://doi.org/10.1287/opre.2022.2325  

   Bichuch, Maxim; Feinstein, Zachary (January 2022, Operations Research)

   In this work we present an equilibrium formulation for price impacts. This is motivated by the Bühlmann equilibrium in which assets are sold into a system of market participants, for example, a fire sale in systemic risk, and can be viewed as a generalization of the Esscher premium. Existence and uniqueness of clearing prices for the liquidation of a portfolio are studied. We also investigate other desired portfolio properties including monotonicity and concavity. Price per portfolio unit sold is also calculated. In special cases, we study price impacts generated by market participants who follow the exponential utility and power utility. 

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4. Scalable Demand-Aware Recommendation

   Yi, Jinfeng; Hsieh, Cho-Jui; Varshney, Kush; Zhang, Lijun; Li, Yao (October 2017, Neural Information Processing Systems (NIPS))

   Recommendation for e-commerce with a mix of durable and nondurable goods has characteristics that distinguish it from the well-studied media recommendation problem. The demand for items is a combined effect of form utility and time utility, i.e., a product must both be intrinsically appealing to a consumer and the time must be right for purchase. In particular for durable goods, time utility is a function of inter-purchase duration within product category because consumers are unlikely to purchase two items in the same category in close temporal succession. Moreover, purchase data, in contrast to rating data, is implicit with non-purchases not necessarily indicating dislike. Together, these issues give rise to the positive-unlabeled demand-aware recommendation problem that we pose via joint low-rank tensor completion and product category inter-purchase duration vector estimation. We further relax this problem and propose a highly scalable alternating minimization approach with which we can solve problems with millions of users and millions of items in a single thread. We also show superior prediction accuracies on multiple real-world datasets. 

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5. Real-Time Residential Demand Response

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   Li, Hepeng; Wan, Zhiqiang; He, Haibo (September 2020, IEEE Transactions on Smart Grid)

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