All Questions
14,667
questions
0
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0
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6
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Constructing a game given its mixed strategy equillibrium
Construct a 4x4 game that has a unique Nash equilibrium. This unique equilibrium should be
in mixed strategies (using all 4 strategies of each player: A, B, C, D for player 1 and a, b,
c, d for player ...
- 1
1
vote
2
answers
15
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Reserve ratio from H.8 report
Reserve ratio definition
Macroeconomic textbooks define reserve ratio as reserves / deposits.
So for example, the following bank:
has a reserve ratio of ...
- 309
1
vote
0
answers
10
views
How to interpret impulse response functions?
I need your help. How do I interpret the following impulse response functions in sequence to a growth factor shock in the context of an RBC model?
And how can it be that the marginal tax rate ...
2
votes
0
answers
9
views
Dispersion of housing prices in Hsieh And Moretti (2018)
I have been reading 'Housing Constraints and Spatial Misallocation', by Moretti and Hsieh, AEJ Macro 2018, https://www.aeaweb.org/articles?id=10.1257/mac.20170388
In their equation (7), they derive a ...
- 21
1
vote
1
answer
18
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Factor changes in Melitz (2003) model
What would be the effect of changes in factor supplies, for example labor, on the open economy equilibrium?
- 1,501
4
votes
1
answer
91
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Does the Rybczynski theorem also hold in modern trade theory models?
Does the Rybczynski theorem also hold for modern Melitz (2003) type trade models?
- 1,501
4
votes
2
answers
184
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Why is the supply function the first derivative of the profit function in the long run?
We have the profit function of the firm profit = $p^2 -2p -399$.
We take derivative of it we say that the output supply function is =$2p-2$
I understand that Profit = q*p - TC
But why do we say the ...
2
votes
0
answers
19
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What kind of loans was Credit Suisse given by the Swiss central bank, recently?
Credit Suisse was recently extended \$54-cum-\$108 billion loans from the Swiss central bank, even as its takeover by UBS was announced (partly covered by taxpayers).
I'm slightly more familiar with ...
- 3,868
1
vote
0
answers
13
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Subgames in imperfect information games
I have not previously come across three player games and I am trying to solve for the subgame perfect NE/equilibria for the following game, where player 3's decision node is linked to the decisions of ...
- 11
1
vote
0
answers
9
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what could be the effects of lack of copyright and Patent protections on a country's economy?
would it hinder or encourage growth ? since without incentives to profit from discoveries and creativity there wouldn't be newer innovations but at the same time could ease of access to copyright help ...
1
vote
0
answers
21
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The derivation of the distribution of F-statistics in Hansen's textbook
In Hansen's Econometrics textbook chapter 5 on normal regression model, he claims that
$$\textbf{e}'(\textbf{M}_1 - \textbf{M})\textbf{e} \sim \chi^2_q$$.
How to derive this result?
0
votes
1
answer
29
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If 15 percent of jobs are becoming automated compared to 1993, why are retirement ages rising?
Given that human labour is less necessary with every year that passes, why not tax automation rather than raise the age of retirement?
- 143
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votes
1
answer
34
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Why do all filled bids receive the same rate, which is the rate of the lowest filled bid, during the US Treasury auction process?
This question pertains to the US Treasury auction process. {1} states:
Treasury auctions are designed to minimize the cost of financing the national debt by promoting broad, competitive bidding and ...
2
votes
1
answer
36
views
stochastic optimal control/FOC/Reis(2021)
Reis (2021) `The constraint on public debt when $r < g$ but $g < m$' :
HJB:
$$\rho V(a, q) = \max_{c/a, k/a} [\log c + V'(a,q)[r + (mq-r)\frac{k}{a} - \frac{c}{a}] a + \frac{V''(a,q)}{2} (k/a)^2 ...
- 413
1
vote
1
answer
54
views
Supply function of a price-taking firm with a quadratic production function
For a firm with the production function
$$Q = 40L-L^2$$
where $L$ is labor and wage $w = 20$ find supply function of a price-taking firm under perfect competition. Fixed costs equal $10$.
Following ...
- 13
1
vote
0
answers
27
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Why does the Croatia-Euro to USD exchange rate differ from the Eurozone-Euro to USD exchange rate in the list of Treasury reporting rate of exchange?
Looking at the list of Treasury reporting rate of exchange, I see that the Croatia-Euro to USD exchange rate (0.925) differ from the Eurozone-Euro to USD exchange ...
2
votes
1
answer
44
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Process of deriving TVC(transversality conditon)
In Kruger's note, the process of deriving TVC is expressed as:
$0=lim_{t \rightarrow \infty} \beta^t U'(f(k_t)-k_{t+1})k_{t+1}=lim_{t \rightarrow \infty} \beta^{t-1} U'(f(k_{t-1})-k_{t})k_{t}
=lim_{t \...
- 146
0
votes
0
answers
6
views
Fama French 3 factor model paper on asset pricing anomalies
In their paper, "Multifactor explanations of asset pricing Anomalies (1996)" Fama french states in Table 6 that they observe a Momentum effect in their 12-2 portfolio because If I look at ...
- 101
0
votes
0
answers
13
views
Predicting the Impact of War?
How would an economist go about predicting the impact of a potential war on a certain country's economy?
Say we are interested in assessing the impact of a possible war over Taiwan on the GDP of ...
- 327
2
votes
1
answer
23
views
Prove strict monotonicity of utility function
I have the following utility function: $$ u(x_1, x_2, x_3) = med(x_1, x_2, x_3) $$ Given that $UMG_{i}$ ≥ 0, the utility function represents a strictly monotonic preference. Does this assertion make ...
2
votes
1
answer
20
views
What happens to the LM curve when the interest rate is fixed?
Suppose the interest rate $i$ is fixed at $\bar{i}$. How does the LM curve look like in this case? I suspect that it looks like a vertical line on the $Y$ (x axis) v/s $i$ (y axis) graph. I think so ...
- 23
1
vote
1
answer
34
views
Effect of QT and higher bond yields simultaneously
I don't know much detail about how banking is working so you will have to bear with any misinformation or false conjecture I may have.
The US government wants to control inflation in 2023. The Federal ...
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-4
votes
0
answers
66
views
I've asked chatGPT to ask chatGPT
I have recently posted this question.
I realized I could post a lot of similar ones by just exchanging the variables; but I just asked chatGPT to write a prompt similar to my own and asked it that one ...
- 28k
-3
votes
0
answers
74
views
I've asked chatGPT to explain pairwise relationships between economic variables [closed]
I asked chatGPT something, but I know its answers aren't always accurate. Please tell me if its answer is flawed in any way. And if you can give a better answer, please do so.
Please explain to me ...
- 28k
2
votes
1
answer
58
views
Relationships between several economic concepts, and chatGPT's explanation [closed]
Sadly I have so little knowledge of economics that I can barely read the news these days. Answering my questions the old fashioned way (via Google) tends to confuse me more. So I asked chatGPT, but I ...
- 29
2
votes
1
answer
23
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Diff in Diff: Why do we control for unit and time fixed effects instead of just treatment status and pre/post indicator?
In a multi-period DiD analysis, the usual specification is:
$$y_{it} = \alpha_i + \theta_t + \beta D_{it} + \epsilon_{it} $$
where $D_{it}$ is the interaction between ...
- 243
1
vote
1
answer
32
views
Positional externalities - Are marketing and higher education examples of market failure?
As Mankiw explains in chapter 10 of the latest edition of Economics (chapter 9 in the previous few, I believe).
Positional externalities lead to "a professional squash player getting the extra ...
- 375
1
vote
1
answer
107
views
Do banks pay interest on the money they create?
A bank takes in \$10 in deposits and makes \$100 in loans, creating \$90 of new money. They pay the depositor interest on the \$10 and earn interest on the $100 loan.
It looks to me like they don't ...
- 11
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votes
0
answers
26
views
Steps for obtaining the equilibrium price in Hoteling model with switching costs
On pages 521-522 of Kemperer's paper (1995) is an example to the theory, that basically contains what's in these slides:
I've been trying and failing to get the equilibrium price $p^A_1$ shown on ...
- 180
-1
votes
0
answers
48
views
Game Theory 4x4 Matrix
I am trying to solve the following problem:
Solve a 4x4 game that has a unique Nash equilibrium. This unique equilibrium should be
in mixed strategies (using all 4 strategies of each player: A, B, C, ...
- 1
3
votes
2
answers
92
views
What is the budget constraint when we assume a common utility function?
Let's consider an exchange economy with two identical consumers. The
common utility function is:
$$u^i (x_1, x_2) = x_1^α x_2^{1-α} \;\;\; \text{for} \;\;\; 0 < α < 1.$$
Society has 10 units of ...
2
votes
0
answers
44
views
Complete markets and convenience yields
I have been reading some papers on the safety/liquidity of US government debt and got a bit perplexed by the assumptions made in some of those papers. For example, this paper by Mehrotra and Sergeyev ...
2
votes
2
answers
114
views
Finding Walrasian equilibria when Walrasian demands are not unique
I'm trying to solve the following excercise:
Find the Walrasian equilibria for a pure exchange economy where agents' ($A$ and $B$) preferences and endowments are given by:
$u_A = x_A + y_A$
$u_B = 2 ...
- 1,128
2
votes
1
answer
23
views
How would a Central Bank Digital Currency be different from a private bank deposit?
Both are digital, both can be transferred digital, and both are denominated in the same currency. A CBDC is "a direct liability of the central bank, rather than of private banks or coin issuers&...
- 21
1
vote
1
answer
33
views
How to properly annualize cost of initial investment
Let say you manage a supermarket chain and want to estimate profitability of a store over time, not only by using revenue and cost for a given unit of time - but also to include the initial investment ...
- 111
3
votes
1
answer
45
views
Bank runs, deposit guarantees, and moral hazard
I understand the concept of moral hazard. If a government guaranteed all bank deposits 100%, bank customers would simply go to the bank with the highest interest rates and rely on the guarantee that ...
- 241
0
votes
0
answers
17
views
Nash equilibrium for tender offers in case of three equal share holders
So the case starts with tender offers from Campeu and Macy's, and go through possible equilibrium in case there are two equal share-holders, or many share-holders:
which shows Campeau's offer is a ...
- 85
2
votes
1
answer
167
views
Why is there a Walrasian Equilibrium if excess demand goes to infinity as price goes to 0?
In one exercise, we have to argue that a Walrasian Equilibrium exists and the solution says that if we can see that excess demand goes to infinity as price goes to 0, and as price goes to infinity, ...
3
votes
1
answer
85
views
$N(A) \oplus R(A) = V \; \forall A$?
If $A$ is a $m•n$ matrix.
Question: Is $N(A) \oplus R(A) = V \; \forall A$ ?
Update: I now think this question makes sense only for square matrices, as noted below.
Terminology
$R(A)$ By this I ...
- 343
1
vote
1
answer
62
views
What aspects of Money Creation in the Modern Economy are no longer correct
It has been suggested in some comments of another question that the well known paper Money Creation in the Modern Economy is no longer fully correct. What aspects of the paper would need to be ...
- 1,010
0
votes
3
answers
98
views
Money Creation Confusion
I've been studying money creation recently and have come across some contradictory statements and different types of theories that I'd like to clear up.
The classical theory of money creation which ...
- 13
1
vote
1
answer
35
views
Proving that strict convexity is violated
I am given a utility function $u(x)=x_1^2+x_2^2$ and I am asked to see whether this function satisfies strict convexity. The answer is saying this:
We see that $u(3,0) = 9$, $u(0,3) = 9$, $u(1.5,1.5) =...
- 57
0
votes
0
answers
6
views
Latent community detection from input-output linkages
I am looking for a method or algorithm to compute the similarity between two companies based on input-output linkages. That is, from a graph where companies are nodes and sales are directed edges, can ...
- 145
0
votes
0
answers
26
views
How to prove that the profit function is increasing in p and decreasing in w? [closed]
How to prove that the profit function is increasing in output prices p and decreasing in input prices w?
- 31
2
votes
1
answer
68
views
Why don't Time Series books talk about exogeneity like in classical linear regression models?
Consider the following linear regression:
$$y_t = \beta_0 + \beta_1 x_{t} + u_t$$
Typically, we need to assume (assuming a random sample):
\begin{equation}\label{I}\tag{I}
E[u_t]=0, \quad cov(u_t ,x_t)...
0
votes
2
answers
42
views
Marginal utility vs Total utility [closed]
If marginal utility is positive, consuming an additional unit of a product will cause total utility to decline. Is that statement true and why?
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-1
votes
1
answer
52
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What is the economical perspective of the value of an egg globally if we take in some hypothetical considerations?
I am fairly new to economics and doing some research, so pardon my lack of knowledge on the topic if this is a dumb question.
The main question i have is: Does an egg have the same value around the ...
- 99
0
votes
0
answers
9
views
Argument the coefficient of diff-in-diff after matching
I am trying to use the propensity matching score to match the control and treatment groups based on their characteristics (can be done by gmatch, psmatch2, tseffect match...)
However, after matching, ...
- 1,068
0
votes
0
answers
8
views
Calculating GDP growth rate between different countries without inflation data
I am working on an assignment to compare the GDP growth rates of different countries over a period of 5 years. Just to be clear, I have 2 sets of GDP data points, one set in Year 1, and another set in ...
1
vote
1
answer
29
views
reservation price
How do i use reservation price to determine when the car ride is the best option?
Assume we have utility function $$U(x_1,x_2)=4x_1^{0.5}+2x_2^{0.5}$$
and we have income $m=20$. If you stay in ...
