# Economics Stack Exchange Community Digest

## Top new questions this week:

I am required to show that if: $f:R^L \rightarrow R$ is a strictly monotonic function and $u:R^L \rightarrow R$ is a utility function representing a preference relation $\succsim$, then the function $... microeconomics proof  asked by Kinno 2 votes  answered by Michael Greinecker 3 votes ### Closed form solution to consumption-saving model in discrete time Consider the simplest consumption-savings model of the following form: $$\max_{\{c_t,a_{t+1}\}_t}\mathbb{E_0}\sum_{t\geq 0} \beta^tu(c_t) \\ a_{t+1} + c_t = (1+r)a_t + y_t \\ y_t \mid y_{t-1} \sim F ... macroeconomics consumption dynamic-programming dynamic-optimization saving  asked by Jsck 2 votes ### Is Hal Varian's intermediate microeconomic externality graph wrong? Here is the capture from Hal Varian's Intermediate Microeconomics chapter Externality. I remember clearly my lecturer said this graph is wrong several years ago, but I cannot remember the argument ... microeconomics public-economics welfare-economics environmental-economics  asked by LJNG 1 vote  answered by Adam Bailey 1 vote ### Negative Definite vs Semi-definite Hessian - Sufficient vs Necessary conditions? When a Hessian matrix is negative definite at a critical point then that critical point is a local maximum (Sufficient Condition). As per the calculus wiki: Link, when the Hessian is negative semi-... mathematical-economics optimization linear-algebra  asked by Kinno 1 vote  answered by Bertrand 2 votes ### What are the major flaws of the RBC model and how does the New Keynesian model address them? Looking for a generic answer to this question and potentially literature etc. that will help me study this question. Thanks in advance. macroeconomics new-keynesian-economics rbc  asked by Emma Tilda 1 vote  answered by manifold 1 vote ### Opportunities for Computer Science Graduates in the Field of Economics I know this question has been asked quite a few times already but I have several other different questions to ask too. So, I am asking all of them here. Let me give you a quick summary of my ... academic-graduate research computation data python  asked by Shahriar Tasnim 1 vote  answered by RegressForward 1 vote ### Lagrangian in Ramsey model I struggle to write and solve Lagrangian in the Ramsey model. I have the following individual preferences with a budget constraint: and an additional constraint that is a no-ponzi condition: How to ... macroeconomics microeconomics utility  asked by Julie 1 vote ## Greatest hits from previous weeks: ### How can I obtain Leontief and Cobb-Douglas production function from CES function? In most Microeconomics textbooks it is mentioned that the Constant Elasticity of Substitution (CES) production function,$$Q=\gamma[a K^{-\rho} +(1-a) L^{-\rho} ]^{-\frac{1}{\rho}}$$(where the ... mathematical-economics production-function cobb-douglas leontief  asked by Huseyin 26 votes  answered by Alecos Papadopoulos 25 votes ### Perfect complement preferences in an exchange economy So I have an exam in a bit, I understand that to find the optimal choice you have to equate tangent of the two indifference curves. However, if the other indifference curve is a perfect complement, ... pareto-efficiency perfect-complements  asked by Skipe 6 votes  answered by Amit 5 votes ### What are FOCs and SOCs? I keep seeing the terms first-order conditions and second-order conditions used in my undergrad economics class on production functions, monopolies, etc but I have no idea what these terms mean. It ... microeconomics  asked by Stan Shunpike 23 votes  answered by Herr K. 26 votes ### How does everyone not become poor over time? Look at the whole world --the union of all goods and services and workers and customers. Everyone who is a customer is a worker somewhere (they had to get the money to be a customer somehow). But not ... macroeconomics inequality  asked by DeeDee 17 votes  answered by 1muflon1 35 votes ### Differences between Hicksian and Slutskian approaches When deriving the substitution effect for both Slutskian and Hicksian definitions, a 'phantom' budget line is drawn.However, for a Slutskian definition, the 'phantom' budget line is drawn parallel to ... microeconomics consumer-theory  asked by Kenneth .J 7 votes  answered by Catarina RP 5 votes ### Fundamental equations in economics For the other sciences it´s easy to point to the most important equations that ground the discipline. If I want to explain Economics to a physicist say, what are considered to be the most important ... macroeconomics microeconomics mathematical-economics soft-question  asked by Lumi 68 votes  answered by Alecos Papadopoulos 53 votes ### What do supply-demand curves really look like? In my basic high school economics course, we've always used supply-demand curves that are lines to simplify calculations. In real markets for real goods, what do the supply and demand curves look like?... microeconomics supply-and-demand  asked by eepperly16 19 votes  answered by ahorn 15 votes ## Can you answer these questions? ### Fuzzy RDD when individuals can affect the probability of treatment I want to evaluate the effect of getting into a program on earnings. In my case individuals that get a score above$c\$ can decide weather to get into the program or not. On the other hand those that ...

instrumental-variable causal-inference rdd

### Price rigidity and demand-constrained economies

In this note, http://web.mit.edu/krugman/www/MINIMAC.html, Krugman develops a simple model to introduce the idea that whenever an economy experiences price rigidity then this economy is demand-...

macroeconomics price aggregate-demand multiplier