All Questions
Tagged with macro or macroeconomics
3,003 questions
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Conditional Convergence
Lets assume that we have a theoretical model in this specification to test conditional convergence:
\begin{equation}
\frac{1}{T} \ln\left(\frac{y_{it}}{y_{it-1}}\right) = a - (1 - e^{-\beta T})\ln(y_{...
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1
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131
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Balanced Growth Path in a 3-Sector Economy
I'm going over a past paper for a macro course I'm taking and have gotten stuck on the last part of one of the questions.
Suppose we have a three-sector economy. We are given $B_a,B_s>0$, a ...
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Solving an equation for k_t in a modified Solow model
I want to solve my modified solow equation for k_t to get the steady state. But since I also inclueded the marginal product for the price of Energy its pretty difficult for me to find a solution.
here ...
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95
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Controlling for Log population with Log GDP per Capita outcome in OLS
Bartlett and Partnoy (BP) (2020) show that OLS with natural log dependent variables that are ratios must include the ln(denominator) on the RHS or they must assume that the numerator and denominator ...
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Normalization for model comparisons
I have a time series applying the Markov Switching model, which is estimated in about 15 different versions. One or two of the time series had to be normalized in order to converge. That is 1-2 out of ...
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2
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212
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Level of Mathematics required to be successful PhD level
I am hoping to study Economics at the graduate level but my current math is lacking.
I have Calculus II, Linear Alebra I, Stats 1-3 and Econometrics under my belt.
I am to take Linear II, and Calculus ...
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2
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323
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Absolute Convergence
I have noticed that some researchers in order to test convergence hypothesis apply a model in this form:
$(1/T) \ln(y_{it}/y_{i,t-1}) = b_0 - b_1\ln(y_{i,t-1}) + u_{it} $
(Barro & Sala-I-Martin, ...
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47
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Why is eurodollar future so popular
It's well-know that eurodollar futures contracts are the most liquid contracts in the world. Traders use them to express views on interest rates or hedge interest rate risks.
My questions is why are ...
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2
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61
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Meaning of "determines"
In macroeconomics I come across lot of sentences like
In the short run, demand determines output.
In the short run, the central bank determines the interest rate.
In the short run, output is ...
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56
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If Milei is able to apply his economic plan during the next decade, what are the chances of Argentina becoming (once again) a major economy?
Once Argentina was one of the strongest economies in South America. It is pretty clear that the economic model that made Argentina successful then does not stand a big chance to work again. Javier ...
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Good tutorial on constrained optimization with state switching (macroeconomics)?
I am looking for some tutorial (website, book, video or even answer that explains it directly) that explains how to solve dynamic constrained optimization problem with state switching. Preferably the ...
- 464
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123
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how to derive that golden rule steady state = alpha in the solow model?
I have successfully derived the Golden Rule steady state for capital, but I'm struggling to derive the saving rate = equal to alpha (α) for the Golden Rule level. Have I made an error in my ...
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1
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34
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What is the meaning of "Nominal GDP was converted to 2021 dollars using the GDP Price Index" in ERP 2023?
Reading the Economic Report of The President 2023, there is a note under the real GDP graph stating: "Nominal GDP was converted to 2021 dollars using the GDP Price Index"
What I understand ...
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93
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What is a very very famous example of structural estimation?
I took a behavioral econ class and learnt the "structural estimation" of risk-aversion parameter.
Later some friends told me that what I learnt is too simple when I was bragging about my ...
- 329
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61
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Durable goods in a (two sector) necolassical growth model
i want to add a firm to a neoclassical growth model that produces a durable good which it rents out in each period to the consumers.
Right now i'm using the following approach:
The firm maximizes: $\...
- 11
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23
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Why cant other country Imitate China give people work in place of relief subsidies? especially country with low-employment rate?
From my shallow perspective as a Chinese, whenever there is a low economic growth rate, there is a massive infrastructure building plan as to give people work in place of relief subsidies to stimulate ...
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50
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What is the difference between "The effects of Monetary Policy" and "The effects of Monetary Policy Shock"?
I know this may be a silly question. I always thought these were different but some people in the literature use them interchangeably and I was wondering are they different? If so, how are they ...
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87
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Does anybody know why the Fed Funds Effective Rate has 3 evenly spaced dips in between every FOMC meeting, that suddenly stop on March 21st 2018?
In general the effective rate was much more volatile the further back you go, but now it is perfectly straight, what has changed? The fact that it is exactly three evenly spaced dips of 8-10 basis ...
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23
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What are the ways to take account of inflation?
If one wants to analyze the influence of inflation on other macro economic indicators, what are the best/standard way of how to use it?
I've found 3 variants:
As is (yearly values).
To take ...
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1
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60
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Calculation of simple elasticity problem
I'm reading Advanced Macroeconomics by Romer and having trouble to understand very simple calculation provided in just one sentence.
Define real money market equilibrium condition as $(\frac{M}{P})^s=...
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91
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For my bachelors, would it make sense to use C+G (as Consumption + Government Expenditure) as an indicator for the prosperity of the economy?
Because G is also really just consumed by the people, wouldn´t it make sense to measure all the things that people consume to measure the prosperity of an economy?
At the end of the day, people in an ...
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3
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84
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Why does this example illustrating the effect of growth on exchange rates not work?
I'm looking for a (very) elementary explanation for why economic growth leads to one's currency becoming more valuable. This certainly seems like it should happen (example: "An economy ...
- 1,302
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1
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Why $\gamma(c,i)=cv(i)$ means diseconomies of scale?
Let's define the transaction cost of credit consumption as $\gamma(c,i)$ where $c$ is consumption and $i$ is a fraction of credit purchase.
If the transaction technology does not exhibit economies of ...
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1
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82
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Ramsey model problem
Explain the no-Ponzi game condition throughout the function.
Does the constrain function: also reflect include the No-Ponzi condition?
- 131
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1
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77
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Mankiw Chapter 5 and Price-Specie Mechanism
I've recently been reading through Mankiw's Macroeconomics, 7th edition.
In Chapters 3 & 4 describe the Classical theory, which pretty much exactly lines up with the model that Keynes outlined in ...
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75
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How the saving rates were derived in Azariadis (1996)'s Impatience Trap?
The household maximizes his lifetime utility function according to
$$
\max_{c_1, c_2} v(c_1, c_2) := \frac{1}{\beta(c_1)} \log c_1 + \log c_2 - A(c_1, c_2)
$$
subject to
$$
\beta(c_1) = \begin{cases}
...
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1
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148
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Deriving Unit cost function
Unit cost function is the minimum cost to produce one unit of output.
The solution to the above problem is:
where ai(w,r) is the amount of labour needed to produce 1 unit of good i at factor prices (...
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83
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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
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2
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583
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In what way do developed countries steal trillions of dollars from developing countries?
According to the Guardian, rich Western countries 'steal' large amounts of money from poor countries, much more than they give in development aid.
If we add theft through trade in services to the mix,...
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46
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Deriving euler equation and transversality condition
$U(c_t)=\sum_{t=0}^{\infty}\beta^t(\{u_0c_t+\frac{u_1}{2}c_t^2\})$ subject to $c_t+k_{t+1}\leq f_0 k_t$
I need to find the euler equations and the transversality conditions.
I have currently tried ...
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52
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Why do estimates of potential GPD made at different origins differ?
I am stuck on a diagram that shows the development of GDP over time period from '04 to '16.
We have 4 graphs; actual GPD, and estimates of potential GDP made in '07, '10 and '15.
Now to the actual ...
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1
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112
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Intermediate/used goods and GDP
I am new to macroeconomics and I had some questions about GDP when we say that it does not take into account intermediate goods. Therefore, a company X that only sells car parts to car brands like ...
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702
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Increasing Returns to Scale and Perfect Competition
Increasing returns to scale due to internal economies are incompatible with perfect competition BUT increasing returns to scale due to external economies are compatible with perfect competition
SOURCE:...
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3
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1
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108
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Capital-Output Ratio using Nominal GDP and Nominal GFCF
I have this assignment which asks the following:
"Compute the average capital-to-output ratio in Australia from 1960 to 2022. Explain how to compute
the average ratio. (Hint: use the nominal GDP ...
4
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1
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144
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What is the net effect of organized crime on the economy of Italy?
In connection to this question are there any empirical estimates of the effect of organized crime on economy of Italy? I am looking for some net effect.
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1
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How does the claims on gold increase when debt is involved?
I was reading Ray Dalio's book on Priciples for dealing with the changing world order, and I came across this statement
"""
At first there are the same number of claims on the "...
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1
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155
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Log-linearization of the additive habit formation model
I am trying to derive the log-linearized Euler Equation (EE) of a Model with additive Habit formation. Attached you will find my attempt to derive the EE. I am missing an (1-b) in the denominator. ...
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36
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Defining an Arrow Debreu Equillibrium with a No Default Constraint
I am faced with defining an equilibrium for a two person (infinitely lived) market with borrowing and lending of one period bonds. Their utility of consumption is just $\sum^\infty_{t=0} \beta^t ln(c^...
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2
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62
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What downside is there to making the USD the national currency for your country?
I get that for huge countries like China, you can't have the US controlling your currency.
But for some smaller countries, or new fledgling countries, why not have the USD be your national currency? ...
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1
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40
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Why does the demand for central bank money shifts to the right with an increase in the reserve rateo?
Defining the demand for central bank money as $ [c + \theta (1-c)]M^d $,
where c = percentage of money people keep as currency, and $\theta$ the reserve rateo, I don't understand why, as my book ...
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111
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Monetary policy: could there by alternative outcomes?
Firstly, I understand the standard analysis of how a central bank attempts to modulate credit conditions in the economy (and therefore money supply) to dampen demand to prevent excess price level ...
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4
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How is Italy so rich, given its high corruption and crime?
Much of Italy's territory is de facto controlled by organized crime, rather than the State.
The corruption of its long time leader, Silvio Berlusconi, was all but record breaking.
Given the above one ...
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2
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75
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Would it work? A tax that automatically toggles on-off
Could we create a tax that automatically toggles on or off depending on the state of the economy taking into consideration that the revenues would be saved for further use, either to stimulate the ...
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1
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146
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A generations funds to reduce the debt
In Canada, the Province of Quebec created a generations fund in 2006 in order to reduce the debt.
As of March 2023, Québec’s net debt stands at $206.8 billion, or 37.4% of GDP..
Do you know if any ...
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0
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30
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What is a correct way of writing conclusion based on a country's data
Suppose I use the US data and find that unanticipated increase in the interest rate reduces the stock prices. Then, do I conclude "Based on the US data, unanticipated increase in the interest ...
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1
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244
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Ramsey model condition
Why are transversality conditions and no-ponzi game conditions needed in the Ramsey model? And why do we assume that is a CIES utility function?
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45
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how to Log-linear this equation?
I am working on my thesis, doing a model with energy price. I am following this paper "Energy Price Shocks and Financial Market Integration: Evidence from New Keynesian Model", Tarek ...
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1
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44
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PER CAPITA SPENDING - IS THERE A MODEL?
In 1975 the world population reached 4 billion people.
In 2023 it reached 8 billion
In 1975 the US population was 211 million.
Today it is 340 million.
Considering that:
1- we now have more people, ...
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1
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732
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Do I have a correct understanding of what a measure is?
Simple question but I just to want to verify whether my understanding is correct.
The length of an object is a measure for how long an object is
if I measure (quantify) the length of an object, say ...
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30
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Is there a global flow of income?
If I understand the circular flow of income correctly, we can visualize money moving around the country in exchange for goods and services. Sources of money are the central bank (MB) and the financial ...
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