All Questions
Tagged with macro or macroeconomics
3,003 questions
2
votes
0
answers
54
views
Irrelevance of Heterogeneous Agent Modelling
This is a question from a previous year PhD entrance exam. I have outlined how I have tried to tackle the problem as well:
N.B. 1 This exam is of 100 points and this particular problem is of 25 points....
- 51
4
votes
2
answers
185
views
Intuition of sign used for Lagrange multiplier and corresponding constraint function in constrained optimization
It seems that in many applications there may be some economic interpretation for the Lagrange multiplier and thus it might be beneficial to ensure it's value takes on a specific sign.
If the above is ...
- 175
0
votes
4
answers
259
views
Since it doesn't change the money supply, how can an "expansionary" fiscal policy alone spur economic growth?
I understand how monetary policy can be used to heat up an economy by increasing the money supply, but how can a fiscal policy do so? When the government borrows money to increase spending, it is not ...
-1
votes
1
answer
490
views
Why must goods in the country will be purchased with the entire money supply in the country?
In russian books it's written that there is balance between commodities and money. And this balance guarantees that all goods in the country will be purchased with the entire money supply in the ...
- 139
0
votes
0
answers
18
views
Does billionaires take loan secured by stocks to reinvest in their company?
Can billionaire use his company stocks to get loan, then invest it in his company, and get even bigger loan secured by stocks? And repeat this forever. I guess this wouldn't work, but why?
- 1
5
votes
3
answers
2k
views
Economists Working At the Intersection of Pure Math and Economics
As a math student interested in economics I was recently reading some of the papers by Graciela Chichilnisky on social choice theory and some of her papers applying topology to other areas of ...
- 4,160
0
votes
0
answers
45
views
Romer-Romer shocks in a monetary VAR
I'm trying to better understand implementing Romer-&-Romer monetary shocks in a monetary (S)VAR.
If I start with a standard VAR of prices, output and the Federal funds rate, I can do a Cholesky ...
- 361
1
vote
0
answers
62
views
Cake eating problem with income over time
I'm trying to implement a solution to a dynamic programmig exercise (cake eating) in Python.
Consider the following problem. An individual lives for 20 periods. In the first 15 periods he receives an ...
- 29.7k
1
vote
0
answers
33
views
Difference in difference on election impact on asset prices?
I am looking to research the impact of Brexit on the FTSE100 index.
FTSE100 is an stock index of the 100 largest UK companies. The UK also has FTSE250 which is an index of 250 mid-cap companies (not ...
- 111
2
votes
1
answer
47
views
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-...
CommunityBot
- 1
-3
votes
1
answer
126
views
Economics as non zero sum game [closed]
If economics is not a zero sum game then why its difficult to earn money.I mean just increase the size of the cake and distribute it.
- 58.5k
1
vote
2
answers
152
views
How to derive Fisher's equation?
Guys help me derive Fisher's equation or suggest references that have the derivation.
I am looking for this relation: (1+i)=(1+r)(1+π)
- 175
3
votes
1
answer
235
views
Use Lag Operator to find Lifetime Budget Constraint
The budget constraint is
$c_t + \tau_t + s_{t+1} =w_t(1-l_t) +(1+r_t)s_t$
And assume
$\underset{t \longrightarrow \infty}{lim} \ \displaystyle{\frac{s_t}{\Pi_{i=1}^{t-1} (1+r_i)}} = 0$
Lag ...
CommunityBot
- 1
1
vote
1
answer
65
views
Capital income growth equals labor income growth along the balanced growth path
I am trying to show that when technological and population growths are (non-negative) constants, the rate of growth of capital income and labor income in the steady state will be equal. Assume that ...
- 4,160
1
vote
0
answers
22
views
Parameter in calibration are not sufficient for pruposed Model. Where is the lacking data coming from?
The paper „social security reforms, capital accumulation and welfare: A notional defined contribution system vs a modified payg system“ by Lin, li
Presents a model for analyzing the impact of ...
1
vote
1
answer
61
views
Definition of wage in the Solow Model with Technological Progress
Consider the Solow model with technological progress. Suppose the production function is given by $F(K(t),A(t)L(t))$. The variables used are standard.
Questions:
Assuming the output price is ...
- 29.7k
1
vote
0
answers
73
views
Blanchard Khan Conditions and State Variables in Three Equation NK Model
Suppose we have a three equation NK model based on logarithmic household preferences specified by $$\begin{align*}y_t &= \mathbb{E}[y_{t+1}]-(i_t-\mathbb{E}[\pi_{t+1}]-r_t^n) \\
\pi_t &= \...
- 952
1
vote
0
answers
51
views
Checking whether Ricardian equivalence holds
If I need to check whether Ricardian equivalence holds in a given economy, I only need to look at whether the equality $G + \frac{G}{1 + r} = Nt + \frac{Nt}{1 + r}$ holds, right? (I'm using $G$ to ...
- 129
5
votes
1
answer
312
views
Balanced Growth (Solow Model)
Sometime ago, I asked for the definition of steady state in the Solow Model. I came to the conclusion after reading the answer that the steady state is the sequence $\{(K(t), L(t), Y(t), C(t), w(t), r(...
- 4,160
4
votes
1
answer
326
views
LSE EC417 2023: Markup as Elasticity Tends to Unity
I'm going over a macro past paper and am stuck deriving and interpreting a result.
The question begins with the CES aggregator for aggregate output $Y$, based on a continuum of intermediate goods $(...
- 952
3
votes
1
answer
12k
views
GDP Identity:Why does $\text{C+S+T = C+I+G+(X-M)}$?
$$\text{C+S+T = Y = C+I+G+(X-M)}$$
where:
$\text{Y}$ is GDP
$\text{C}$ is Private consumption
$\text{S}$ is Private savings
$\text{T}$ is net taxes
$\text{I}$ is investment
$\text{G}$ is ...
- 1
4
votes
0
answers
68
views
Ramsey model and the steady state
Following Barro's book about the Ramsey Model, when we work with variables expressed in units per effective labor we end up with the following system of 2 differential equations
\begin{equation}
\frac{...
- 430
2
votes
1
answer
75
views
what portion of US consumer spending that is debt-financed (looking for data source)
In a piece from Business Insider, we read:
US households today have a savings rate of just 3.7% — way below the historical levels of 9%. Meanwhile, consumer spending exploded by \$208 billion in the ...
- 311
1
vote
0
answers
27
views
Balance of Payment vs. FX rate
How can a country with a Current Account deficit can have an exchange rate appreciating and viceversa a Current Account surplus and a currency depreciating?
3
votes
1
answer
76
views
Demand aggregation with CES
I am reading the following paper by Angeletos and Lian and got stuck on equation (3). The problem is the standard optimal consumption bundle choice. Namely, aggregate consumption of "farmer" ...
- 12.8k
0
votes
1
answer
82
views
Ramsey model problem
Explain the no-Ponzi game condition throughout the function.
Does the constrain function: also reflect include the No-Ponzi condition?
CommunityBot
- 1
2
votes
1
answer
151
views
Solow Model: Steady state when there's population and technology growth
How is the steady state of a Solow Model defined when there's population growth and technological growth? The usual definition is to have $\dot{k} = 0$ (or $k_{t+1} = k_t$ in case of discrete time) ...
- 311
0
votes
0
answers
19
views
Consequences of running a panel VAR with 2 variables stationary at levels and one variable stationary at first difference
I have a trivariate Panel VAR system with the following variables:
LnGDP (Natural log of GDP)
Fiscal Expenditure (as % of GDP)
Interest rate ( in %)
LnGDP and interest rate are stationary at levels ...
1
vote
1
answer
333
views
How To Publish a Quantitative Economics Paper Without a Degree or Affiliations
I dropped out of a physics degree and do not have a degree. After this, I somehow found myself going from writing marketing software related code to writing quantitative trading code and doing ...
- 58.5k
1
vote
0
answers
42
views
some question on Buera and Nicolini (2004)
I am struggling with understanding one result in Buera and Nicolini (2004) published in JME. In page 538, they write
$$A_t(h^t) b_{t-1}(h^{t-1}) = Z_t(h^{t-1})$$
where $A_t(h^t)$ is a $N \times J$ ...
- 29.7k
0
votes
1
answer
42
views
Import proportionality assumption in input-output tables
I'm struggling to get the meaning of the assumption underlying the construction of the input-output tables, that is, the proportionality assumption. I read:
When materials offshoring is measured by ...
- 29.7k
0
votes
1
answer
83
views
Cost Minimization
Guys in the following optimisation problem why are we not considering the partial derivate of K and L in the Lagrangian in the first two equations
CommunityBot
- 1
3
votes
0
answers
47
views
Sustained growth in Ramsey model
It is known that in the classical Solow model that if we use CES production function instead of Cobb Douglas function, it is possible to have sustained growth if the substitutability is larger than 1.
...
- 31
2
votes
2
answers
118
views
How central banks can lend money and always expect more money
for making this question clear let's create a simplified world when there are only 3 private banks (bank A, bank B, bank C) in the world, and 1 central bank. let's also assume that all the citizen in ...
- 354
4
votes
0
answers
44
views
Labor augmenting technological progess and its relevance
Can you provide a proof showing why balanced growth requires technological change to be labor-augmenting in the neoclassical growth model?
- 319
2
votes
1
answer
130
views
Production function in Solow Model
I was studying about the Solow Model from Acemoglu. One of the properties of the production function $Y = F(A,K,L)$ is that it exhibits diminishing marginal products. That is, $F_{KK} < 0$ and $F_{...
- 58.5k
0
votes
0
answers
52
views
A question about a derivation process in gali (2015), chapter 2, equation 20
In chapter 2 of Gali's book, he uses the equation (25):
and combine the "driving processes for technology and preference parameters", inflation can be written as :
I wonder how this new ...
- 1
2
votes
0
answers
150
views
Global Asymptotic Stability in the Solow Model - Rigorous proof
Consider the (simplified) Solow equation, which is a first-order non-linear difference equation:
\begin{equation}
k_{t+1} = sf(k_t) + (1-\delta)k_t
\end{equation}
where $s$ and $\delta$ are two ...
- 430
0
votes
1
answer
64
views
How to Compute the ln of the GDP with only the growth rates
I have an exercise where I was only given the growth rates of an economy for every year, starting in 1985 and ending in 2023. Using only this data, I was asked to compute the ln of the GDP for 1984. ...
CommunityBot
- 1
4
votes
2
answers
212
views
Definition of economics
What is the accepted definition of economics?
I've read basically two versions, one that defines it as the study of scarcity and the other as the study of how to coordinate human desires given ...
- 12.8k
1
vote
1
answer
68
views
What exactly is an exogenous stationary distribution?
All jobs are identical except for their wages, and wages are given by
an exogenous stationary distribution of $F (w )$ with finite (bounded) support $\mathbb W$.
This is from page 6 of https://ocw....
- 58.5k
5
votes
2
answers
110
views
In VAR models, do variations in the variables come solely from shocks?
In DSGE models, if you shut all shocks to zero, then the variables have zero variations. Thus, they just equal their steady-state values for all periods. So the series for all variables are just flat ...
- 1,662
0
votes
1
answer
210
views
Why was the September 2022 United Kingdom mini-budget so badly received, but not other similar budgets?
I'm not sure if this is an economics question or a political one. I'm posting it here because I'm looking for an economics-based answer.
In September 2022, UK Prime Minister Liz Truss produced a ...
- 58.5k
0
votes
0
answers
14
views
IS Curve and AD Relation
Relation between Aggregate demand and Investment saving
What happens to the Investment saving curve when Aggregate demand curve is steeply sloped?
I know that with a higher Marginal propensity to ...
2
votes
1
answer
123
views
What is the frisch elasticity and its meaning?
I understand that Frisch elasticity is the "elasticity of hours worked to the wage rate".
I wonder why then we use this specific naming only for this?
Is this to make it clear what this ...
- 29.7k
2
votes
2
answers
253
views
Proving the Global stability in the Solow Swan Model
Consider a simplified version of the Solow-Swan model in discrete time, where technology is normalized to one and the population size is constant.
The Solow equation is given by
\begin{equation}
...
- 430
1
vote
1
answer
255
views
Why are sticky wages an explanation for an upward sloping SRAS curve?
I often see that the theory of sticky wages is cited as an explanation for an upward sloping short run aggregate supply curve. I understand that if aggregate demand shifts to the left, there will be ...
- 58.5k
0
votes
2
answers
151
views
Should younger people earn more then older ones?
I think in all societies it is usually the case that when you start a job you are usually paid less than a person in the same position who is about to retire. I'm not an economist by any means, but I ...
0
votes
1
answer
42
views
Present Value of Profits Earned From the Discovery of New Ideas in the Romer Model
Page 127-128 of Romer's Advanced Macroeconomics states that
Equation (3.39) tells us that the profits at t are $\left[\frac{(1-\phi)}{\phi}\right]\left[\frac{(\bar{L}-L_{A})w(t)}{A(t)}\right]$. These ...
- 12.8k
0
votes
0
answers
16
views
Question on productivity cycles
What is “productivity cycles”? Is this different from business cycles?
And suggest papers on the productivity cycles as both theoretical and empirical studies?
I will be happy if you inform me ...
- 192