Questions tagged [macroeconomics]
Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.
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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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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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"If the aggregate supply is linear, demand shocks cannot affect average unemployment", what does it mean?
Aggregate Supply: $\pi_t =\pi_{t-1} -\alpha(u_t -\bar{u})+e_t^S$
Welfare: $W_t =-cu_t -f(\pi_t ), c>0, f''(\cdot)>0$
$\bar{u}$: natural unemployment rate
$e_t^S$: supply shock
In Romer's ...
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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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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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Advanced Macroeconomics David Romer Chapter 10
I am currently reading David Romer's Advanced Macroeconomics for self study. Could someone please kindly explain to me how to derive (10.21) from chapter 10 in more detail than the textbook?
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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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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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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 ...
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Condition which satisfies Cash in Advance constraint
Suppose the standard household maximization problem.
Household has lifetime utility function and maximize it
subject to
(1) cash in advance: $c(1-s) \leq m$
(2) budget constraint: $c+q\int_0^s \...
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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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non-ponzi condition
What Is The Differences Between R(T) And R(S) In No-Ponzi Condition In Ramsey Growth Model?
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Ramsey no ponzi condition
Please help me understand how to create these functions, sometime they use "t" denote, sometime use "r" denote that make me feel confuse. Function (17) and from (19) to (23)
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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?
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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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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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Determining macroeconomic events
Which of these events are macro economic events:
1)unemployment has increased over the past month
2)the pharmaceutical society invents a new medicine
3)the interest rates are decreasing for all ...
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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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Do developed countries defraud trillions of dollars from developing countries?
According to the Guardian, rich Western countries defraud 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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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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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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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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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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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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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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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 ...
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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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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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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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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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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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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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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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What is a rational bubble? What are some well known models for rational bubble?
Rational bubble is a situation in which price of asset exceeds its fundamental value and people are buying the overpriced asset because they think that they can sell it for higher in the future. Is ...
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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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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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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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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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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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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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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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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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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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Could the IMF hypothetically end all balance of payments crises?
Ok, so my understanding of balance of payments crises is when a country (who might be doing completely fine otherwise) doesn't have enough foreign currency (typically dollars) to pay back debt.
If the ...
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Where is the central bank in the circular flow of income?
In the five-sector breakdown of the circular flow of income (below), we account for leakages and injections from the financial, government and overseas sectors. My understanding is that the government ...
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Is there a diagram outlining the life of a dollar?
I would like to understand the economic system concretely. My reading leads quickly into graphs and theory, which is interesting but not what I'm looking for. Instead, I imagine I should be able to ...
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$H$ is a constant? Maximizing: $\int _0^Te^{-t}f(x,u)dt$ st $x_t=g(t,x,u)$ and $g$ is independent of $t$
$\max_{x(t),u(t)}\int _0^Te^{-t}f(x(t),u(t))dt$,
st derivative $x_t=g(t,x(t),u(t))$. Prove that $H$ is constant.
My try2:
consider the Hamiltonian
$$
H(x(t), u(t)) = e^{-t}f(x(t), u(t)) + \lambda(t) g(...
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Proportion of time non-renewables determine the price of electricity price
I have a long time-series dataset of electricity generation over a period, broken down by generation type renewable and non renewable. I want to determine the percentage of time that non-renewables ...
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what are the root causes that lead to the 2008 economic recession?
looking at factors that were the roots of the recession in the late 2000s, mortgage-backed securities was one. Can the community reinvestment act be counted as another? Are there any other factors ...
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Process of Printing Bills
I have 3 questions:
Who emits the order to the bureau of engraving and printing for printing the bills? Is it the Federal Open Market Committee or the Federal Open Market Committee established a ...
