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Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

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Lagrangian: when to discount budget constraint?

I am getting a bit confused about setting up the Lagrangian in intertemporal constrained optimization problems. The confusion is as to when is the one-period budget constraint multiplied by the ...
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Effect of taxes/business confidence on real wage

The sample quiz that was given by a professor includes a section about real wages which wasn't mentioned in class or in the textbook. I also searched online, but didn't find anything. The question is ...
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25 views

Cons of printing more money but not injecting in the system directly

So I don't know if this might be the right place, if it isn't I'd appreciate if anyone can link me to the right place. Anyways here is the question. I've read up on what are the cons of printing more ...
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2answers
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What policies are in place to police financial speculation in the modern era?

Maynard Keynes in section VI in chapter 12 of his General Theory of Employment, Interest & Money writes: If I may be allowed to appropriate the term speculation for the activity of forecasting ...
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20 views

Do you find S&P,moodys and fitch ratings reliable?

These 3 sisters could not guess 2008 mortgage crisis and i think they are giving credit notes in politic and ideologic ways not on economic basics..do you think the same?why or why not? i need your ...
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25 views

Ramsey growth model - per capita vs aggregate variables

I am reading a paper Okuguchi,1981 with a Ramsey growth model. There is a constant population growth $n$ such as $L(t)=e^{nt}$. The way he writes the Hamiltonian is quite interesting (equation 5 on ...
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1answer
22 views

Income gap in Ramsey model

Ramsey model with income tax Question: For this question you are required to setup a Ransey-Cass-Koopmans model economy with a Cobb-Douglas constant returns to scale production technology, with ...
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1answer
37 views

Laffer curve in one period economy

Let us consider a perfectly competitive one-period production economy consisting of one firm, N>0 household(s) and one government. Each household is endowed with x unit(s) of physical capital and with ...
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29 views

One period question [closed]

IF I will post one period economy question in macroeconomics, will you answer it? Since I could not see any question related to one period economy in this site, and since question with my answer is ...
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2answers
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when a=0, would economy accumulate more physical capital? Why?

Utility function is $U(c_t,l_t)=(1-a)ln(c_t)+aln(l_t)$ $l_t$ is leasure time $c_t$ is consumption Production function is $y_t=k_t^e(1-l_t)^{1-e}$ $k_{t+1}=i_t+(1-\delta )k_t$ where k is ...
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0answers
16 views

What is the fiscal policy [closed]

What is the fiscal policy in terms of macroeconomics??
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1answer
18 views

Daily variable for inflation

I was wondering if there is a way to account for daily inflation data. I have daily short-term interest rates, and I would like to convert them to real short-term interest rates. Can I just average ...
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0answers
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Finding savings in an Overlapping Generations model

I have not seen this question asked anywhere, so I'm posing it here in case anybody else (hopefully) can help me get to the answer. In a nutshell, my question is: how do we arrive at the saving ...
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2answers
28 views

Are Investments positively or negatively correlated with interest rate

Having just begun self-studying economics, I apologise if this question is too simple. Do investments increase or decrease with increased interest rate? According to the small, closed economy model (...
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0answers
14 views

Are goods and services not assets in NCO definition?

In Mankiw's Principle of Economics, net capital outflow = purchase of foreign assets by domestic residents - purchase of domestic assets by foreigners. And also, NCO = NX (net export). But if we ...
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1answer
22 views

Perpetual Youth Model

I am reading the famous paper of Blanchard,1985. There are some fundamental stuff that I did not really get. 1) Why they call it "perpetual youth"? 2) On page 225, he mentions the cohort size. So, ...
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0answers
33 views

Is it better to tax only on what people spend?

I been recently pondering what might be the best tax system. I kept in mind that this tax system should have advantages for state, companies and for all people. Not people only. What I came up with ...
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0answers
25 views

survival probability and integration by parts

I am trying to integrate by parts by using an indicator function. However, I am not really sure if it is a correct way to change the bounds of integral with indicator functions. I am trying to deal ...
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0answers
12 views

Macroeconomic control variable in GARCH

I would like to model the effects of news coverage on stock returns using a GARCH model. News is given a sentiment score, which is included in the regression as a (daily) variable. However, I would ...
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1answer
70 views

Inflation, Monetarism and Keynesianism

Is there a strict division between the Keynesianism and Monetarism on the view of inflation. In other words, does the push and pull inflation only belong within a Keynesian framework and does ...
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0answers
43 views

Interpretation of twice differentiability, inada condition etc in macro model

In all the models of macroeconomics we adopt some basic assumptions to ensure existence, uniqueness and stability of the equilibrium solution like - linearly homogeneous production function (constant ...
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1answer
112 views

The term “Most Favoured Nation” is misleading to me. Please explain

My understanding If Country A extends MFN status to Country B with reduced tariffs for a product, then it must treat all other nations in the same way. By this WTO encourages multilateral ...
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28 views

Is this way of modeling undisclosed debt correct?

I am woking with a model like the one in Alfaro and Kanczuk (2006), that is in turn based in Arellano (2008), where sovereign´s preferences are given by: that in case of not defaulting is subject to: ...
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1answer
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Long-,short-term interest rates and inflation

I just read about the "dynamics" of long-, short-term intreset rates and inflation. Does the logic go as follows? Centrals banks determine interest rates which in turn determine the short term rates. ...
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1answer
24 views

What could happen if a country changes their currency rate constantly?

Introduction Imagine this random country. "Yolistan", it is a new country that appeared after a war/revolution/independence/whatever. The currency it's the "Yolo" Yolistan needs to import resources ...
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macroeconomic revisions

I am trying to understand what revisions are (specifically inflation and GDP). Asking because i heard some senior people compare different economies based on their relative revisions in these factors ...
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1answer
22 views

What can explain increasing exports after default episodes?

I am going through a paper on sovereign default by Mendoza and Yue (2012), in which defaults are explained in terms of how firms that use foreign intermediate inputs lose access to international ...
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0answers
14 views

Optimal Time-Consistent Fiscal Policy with Finite Lifetimes

I am reading Optimal Time-Consistent Fiscal Policy with Finite Lifetimes by Calvo and Obstfeld. Here is the paper : Calvo and Obstfeld (1988) In fact, their model consists of two stages. In the ...
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2answers
60 views

What does the Leontief Inverse represent? (Intuitive Meaning or Real World Concept)

I encountered that nobody, even my profs and lecturers so far, has an intuitive way to explain what the Leontief inverse represents. Does somebody here? As most people here would know, it goes: $\ ...
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1answer
30 views

Post Brexit Referendum employment theory

According to Chuka Umunna, Labour MP for Streatham and prominent pro-EU campaigner: People were told: "if immigration levels fall, it will be easier to get a job, and easier to get a job that's ...
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1answer
21 views

How net capital outflow = net exports?

How net capital outflow is equal to net exports suppose I export a car to US and in return i got few thousand dollars then instead of acquiring any asset abroad i decided to bring money back to my ...
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16 views

Macroeconomics 101 Problem: Aggregate Demand Changes

Consumer spending initially rises by 5 billion for each 1% increase in household wealth. Investment spending initially increases $20 billion for each 1% decrease in real interest rate. The multiplier ...
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54 views

What actually is aggregate demand?

I have been tasked with teaching some students macroeconomics, and will shortly need to introduce them to the concept of 'aggregate demand'. Usually, this is defined by the following sort of equation: ...
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0answers
22 views

Consumer preferences and government spending

I am studying for an exam and I am focusing on different types of preferences and shocks and the respective responses. This problem has been causing me trouble. The representative consumer in an ...
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1answer
27 views

How Switzerland has significantly high cost of living as compared to its neighboring countries?

Despite being a small country (area-wise), how Switzerland can sustain a high cost of living? I get the logic that the pay of employees would be proportionally higher, so they can sustain a high ...
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18 views

Book suggestion related to the subjects of two questions in the yellow box

I have two types of questions as: policy optimality requires that government precommitment to future actions. And the second one: the intertemporal approach to the current account ...
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30 views

Hp filter question

I know that again you never give any small explanation, but I want to hope you will give any information about that why HP filter is preferable to linear filter for business cycle studies? I only ...
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2answers
64 views

just economic interpretation: Is every steady state a golden rule steady state?

Is every steady state a golden rule steady state in solow model? I know this question’s exact answer. I only want to ask for the following, When know that at steady state $\dot{k}=0$ And in solow ...
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1answer
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Solow model golden rule with my exact answer

In a perfectly competitive Solow economy with physical capital accumulation, population growth and a Cobb-Douglas production function, show that the “golden rule” steady-state would be reached if at ...
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53 views

Improve my solution: Question on solow model

There is a question about Solow growth and Ramsey model, compared to solow model, the Ramsey model is better to explain growth patterns across countries because it predicts a slower convergence ...
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12 views

Pass-through imperct and incomplete are the same?

I am reading some papers about pass-throug. I have the definitions about complete and incomplete like this: "Complete pass-through would mean that the change in exchange rate is directly tied to the ...
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2answers
68 views

What accounts for the high GDP of the United States?

Wikipedia defines GDP as: Measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time. So, I take it that the total value of all goods (and ...
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3answers
49 views

Will periodical increasing and decreasing cryptocurrency supply peg cryptocurrency to dollar effectivelly?

As far as I understand, in order to make cryptocurrency pegged to USD we need somebody to take the risks of exchange rates. So, if ratio CRYPTO to USD is at a given time 1CRYPTO:1,1 USD, then we ...
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1answer
40 views

Does savings lead to investment in physical capital?

In the introductory macroecon textbook I'm reading, it's made clear that savings=investment. Mathematically, this makes sense to me. However, I'm having trouble understanding the qualitative ...
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1answer
51 views

Effect of money supply on price level

Consider a macroeconomy defined by following equations M = kPy + L(r) ; S(r) = I(r) ; y = m ; Where M is money supply, P is price level, y is output, r is interest rate, while k,m are constants. S(...
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2answers
59 views

Retaliating against a foreign country's import tariffs

When Trump imposes tariffs on imports from China, he is hurting American consumers who won't be able to take advantage of cheap Chinese goods. If China was to retaliate by imposing tariffs on imports ...
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1answer
70 views

Quarterly GDP growth: YoY vs QoQ / terminology

Quarterly GDP growth can be calculated either in terms of YoY change or - in the case of seasonally adjusted data - in terms of QoQ change. (A third option would be to annualize the QoQ rate.) To ...
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0answers
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Adaptation of new keynesian model

I'm looking for literature in new keynesian model adaptation to model price shocks. I'm aware of Blanchard, Olivier, and Jordi Gali. 2007. “The Macroeconomic Effects of Oil Shocks: Why Are the 2000s ...
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Balance of activities

Can you explain why the current account of a country is a relevant indicator for the stability of its economic development? I read about this but do not exactly see the link that qualifies it as a ...