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Top new questions this week:

Hardcore elasticity of substitution (bad results)

I have a following function and would like to find the elasticity of substitution between pairs: $$U = \left( x_1^\delta + x_2^\delta + x_3^\gamma + x_4^\gamma \right)^{\frac{1}{\delta + \gamma}}$$ ...

microeconomics mathematical-economics elasticity-of-substitution  
user avatar asked by Athaeneus Score of 4
user avatar answered by BakerStreet Score of 3

What data / evidence is there to support the assertion that wealth taxes are ineffective because they're difficult to implement?

Whenever I see discussions of wealth taxes, inevitably one main assertion keeps being, well, asserted: "wealth tax will never work because it's too difficult to implement". Of course more ...

taxation empirical-evidence wealth  
user avatar asked by KubaFYI Score of 4
user avatar answered by 1muflon1 Score of 2

What is the economic intuition of prudence in the static case?

How can we interpret a "prudent" agent in the static case (i.e., someone with $u'''(\cdot)>0$)? I understand that in a dynamic setting, someone exhibiting prudence would do precautionary ...

macroeconomics microeconomics utility decision-theory risk-aversion  
user avatar asked by ju_pi_car Score of 4
user avatar answered by EconJohn Score of 4

stochastic optimal control/derive the consumption process

(the paper link: p.32, Equation (26), (27))The output process: $d\log y_t = \sigma dZ_t$. The problem is: $$\max_{C_t, B_t} \mathbb E_0 \int_0^\infty e^{-\rho t} \left(\frac{C_t^{1-v}}{1-v} + (y_t)^{...

macroeconomics mathematical-economics optimal-control  
user avatar asked by shk910 Score of 3
user avatar answered by Wittgenstein's Poker Score of 3

International Spillovers of environmental policies

I'm trying to put together a literature review of papers tackling the international spillovers of environmental policies, particularly theoretical contributions. I haven't been able to find much. Any ...

international-economics environmental-economics climate-change  
user avatar asked by user37250 Score of 2
user avatar answered by Adam Bailey Score of 0

Strikes: why so often?

It is clear that the possibility to go on strike is an effective power asset for employees. However, it is also clear that every strike that is carried out is a lose-lose: the employer loses money ...

user avatar asked by leftaroundabout Score of 2
user avatar answered by BB King Score of 0

Solow-Swan Model: Show that $\overline{Q_t} = A_t f(\overline{Z}) e^{gt}$ along the balanced growth path

Suppose a Solow-Swan model with $Y_t = F(K,AL)$ as the production function. Suppose the growth rate of $A$ and $L$ are $g > 0$ and $n > 0$ respectively. It is also given that $\dot{K} = sY - \...

macroeconomics solow  
user avatar asked by imbalancedgrowth Score of 2
user avatar answered by BakerStreet Score of 1

Greatest hits from previous weeks:

Why hasn't innovation in the agricultural industry led to a significant reduction in food prices?

There has been a lot of innovation in the agricultural industry. GMO, giant silos, factory farming, machinery, etc. But if we look at actual food prices since 1960 food actually got more expensive. So ...

user avatar asked by user2741831 Score of 11
user avatar answered by 1muflon1 Score of 33

Can one Calculate Fixed and Variable Cost From TC and Quantity Alone?

I have been asked a question and believe there is a mistake in the problem. I have been given a table of values, Quantity and corresponding Total cost. From those numbers I can easily calculate the ...

microeconomics cost  
user avatar asked by roccosaxman Score of 1
user avatar answered by Elias Score of 7

Deriving the Euler Equation

I want to derive the Euler Equation for the following: $$max \sum\limits_{t=0}^{T} = \beta^{t}U(C_t)$$ $$s.t. C_t+K_{t+1} \leq f(K_t) , t=0,1,2,...,T-1$$ $$-K_{T+1} \leq 0$$ I'm a bit confused ...

user avatar asked by 123 Score of 8
user avatar answered by Alecos Papadopoulos Score of 5

People pathologically hoard so much cash that they impoverish the entire nation

"If a man has an apartment stacked to the ceiling with newspapers we call him crazy. If a woman has a trailer house full of cats we call her nuts. But when people pathologically hoard so much cash ...

macroeconomics money nonexpert poverty  
user avatar asked by Bob L. Score of 28
user avatar answered by Alecos Papadopoulos Score of 41

Equilibrium price and quantity - consumer and producer surplus

Inverse function of market demand for certain good is equal to $P=100-0.25Q$, inverse supply function is $P=20+0.55Q$. Calculate equilibrium price and quantity. Furthermore calculate consumer and ...

microeconomics general-equilibrium producer-theory consumer-surplus producer-surplus  
user avatar asked by Krowskir Score of 4
user avatar answered by Alecos Papadopoulos Score of 1

What happens to the economy if a country simply ban inflation?

Recently Belarus simply decided to ban inflation. the president quoted "From today, any price increase is prohibited. Prohibited!," This is easy to do for a dictatorship but how economy is ...

inflation belarus  
user avatar asked by makouda Score of 5

Why is depreciation added to the GDP with the income approach?

In my economics textbook, it states that when calculating GDP using the income approach, depreciation should be added. Specifically, GDP = Employee Compensation + Taxes less subsidies on businesses + ...

user avatar asked by Vasting Score of 4
user avatar answered by adijsad Score of 0

Can you answer these questions?

Elasticity of substitution between capital and effective labour

While going through the derivation of elasticity of substitution between capital and effective labour in economic materials for a Slow growth model, I found the following step there: $\frac{\partial ...

macroeconomics mathematical-economics production-function elasticity solow  
user avatar asked by A. G Score of 1

Is the canonical two-way fixed effects model biased if treatment effects are heterogeneous across units?

I am trying to understand the key ideas from the recent diff-in-diff literature and get a mixed understanding from reading this review: In pages 12-14, the authors ...

econometrics applied-econometrics fixed-effects difference-in-difference  
user avatar asked by funcard Score of 1

What is the difference among information acquisition, information providing and information design?

Taking a look at the literature of information economics I see three different terminologies about information that seem to have some intersection, though my understanding is not so good. These terms ...

microeconomics mathematical-economics game-theory bayesian-game information  
user avatar asked by Oliver Queen Score of 1
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