Questions tagged [macroeconomics]
Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.
1,450 questions
2
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1answer
128 views
Showing marginal product of capital is independent of the scale of production
The image is pretty much self-explanatory. To add some context, I'm learning Solow-Swan Growth Theory and my professor said that the marginal product will not change if both capital and labor increase ...
0
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0answers
5 views
Relationship between private transactions and central banks' interventions
I read that as an accounting identity, the current account balance (CA), the (narrowly defined) capital account balance (KA) and the official settlements account balance (OSB) must sum up to zero. ...
3
votes
1answer
56 views
Why Certainity Eqivalence in PIH only holds for quadratic utilities
In my current macro economics course, it has been stated that there is certainty equivalence in the random walk permanent income hypothesis ("which implies individuals act as if future consumption was ...
-2
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2answers
48 views
Why don't banks just buy m0 and create unlimited loans?
In fractional reserve banking a bank can buy m0 and use it to create any amount of m1/m2. Why don't they do this? The loans could be just banks lending each other at 0% interest to create unlimited ...
0
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3answers
36 views
+100
Fixed-income investment in a low interest-rate environment
From an investment perspective, it seems to me that a low interest-rate environment can yield to some relatively "un-risky" profits.
As the interest-rate can barely go lower, we now it should rise ...
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0answers
28 views
Are institutions a crappy explanation [closed]
Insitutions correlate .7 with gdp
Race variables correlate .9
Is institutions a vague and bad explanation for income?
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0answers
39 views
Why don't banks just buy m0 [closed]
Under fractional reserve banking everything comes from M0. Why don't banks just buy m0 and make infinite money?
0
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0answers
22 views
Automation of macroeconomic modelling (DSGE modelling)
There are automation software https://cloud.google.com/automl/ and https://autokeras.com/ that automatically builds and tunes machine learning models and machine (deep) learning pipelines. Are there ...
1
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1answer
34 views
Augmented Gravity Model
I am currently using the gravity model for my dissertation on migration flows. Do gravity models need to be augmented by dummy variables only or can other explanatory variables (such as the ...
2
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0answers
26 views
Effect of Modified Utility Function on Initial and End Values of Capital, Labor and Production
I am trying to model a transition path of an economy exposed to a permanent shock to government spending on dynare via matlab.
We start with these model equations (standard dynare code format).
<...
1
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0answers
22 views
J Curve and DD Schedule in the Short Run (International Finance)
Assume that the J-curve is true. What would the DD curve look like during the early period of the J-curve (where the value effect dominates)? What would the effect of temporary changes in monetary ...
0
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0answers
32 views
I don't know how to drive Growth accounting of Labor augmented cobb
Using $Y=F(K,AL)$, I want to know how to derive
$$\frac{dY}{dt}/Y = \frac{dF}{dK} × \frac{K}{Y} × \frac{dK}{dt}/K + \frac{dF}{dL} × \frac{L}{Y} × \left[ \frac{dA}{dt}/A +\frac{dL}{dt}/L\right]$$
1
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1answer
16 views
Cost-push inflation and labour shortage
Is it possible for there to be a shortage of labour in an economy when there is cost-push inflation?
0
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0answers
18 views
Macroeconomics GDP development
If there are no differences in the conjenctures of two countries, what can the differences in their respective GDP development be caused by? One of the countries has 0% growth and the other has 0,21% ...
0
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0answers
14 views
How to extrapolate nominal GDP figures from year to another?
If I have data for nominal GDP data in local currency for several countries for a given year, how can I extrapolate the nominal GDP forward?
Give that nominal GDP = quantities x prices, could I just ...
1
vote
0answers
16 views
'Taxes less subsidies' included in income approach of GDP
Why is 'taxes less subsidies' a part of the calculation of GDP (income approach)?
Is it because in the expenditure method of GDP, consumption expenditure will exceed those of the total "wages and ...
2
votes
1answer
23 views
How printed money gets to the commercial banks?
can you please clarify this for me?
Gov't need money for deficit elimination, so they issuing bonds (lets say 1T, 10 years, 2%).
Fed is buying the bonds with fresh money, so the gov't now has new 1T$ ...
-1
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0answers
22 views
Comparing growth in the Solow model
Say you have the following two countries, under the Solow model how would their growth experiences be different?
...
2
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0answers
24 views
How can the number of hairdressers in the UK be up 50% since 2010?
In this recent article, The Economist argues that one of the reasons behind the anaemic recent wage growth in Britain is that the recent job growth has been concentrated in lower-productivity jobs and ...
1
vote
1answer
18 views
influence of growing foreign demand for local products on the net exports in a fixed exchange rate regime
Suppose we have a country $A$ with a fixed exchange rate regime.
Suppose that, suddenly, the foreign demand for $A$'s made products rose up.
What will happen to $X-IM$?
As far as I can tell $X$ ...
4
votes
1answer
69 views
Deriving average productivity from a CES production function
Following the work of Raurich et al. (2012) I got stuck trying to derive the average productivity starting from the following CES production function:
$$Y=A\left [ \alpha K^{\frac{\sigma -1}{\sigma }}...
3
votes
2answers
56 views
Causal effect of population growth on GDP per capita increase
I'm wondering if there is a logic for the causal influence of population growth on the increase in GDP per capita.
I guess,
increase in population as a factor of production might move aggregate ...
2
votes
1answer
14 views
How does government spending on imported goods affect GDP?
How does government spending on imported goods affect GDP?
Is it first counted as government spending and then subtracted as imports?
For instance, if the US government buy a new accounting system ...
0
votes
1answer
47 views
Does National Savings equal zero in a closed economy? Please give an economic intuition
Context:
$Y -(C+I+G) = X - M$
In a closed economy, $(X-M) = 0$
Notations
Y --> Income/Output
C,I,G --> Consumption, Investment and Government expenditure respectively.
X --> Exports
M --> ...
0
votes
0answers
9 views
How can I isolate substitution effect with respect to z in simple representative agent model?
I'm reading Notes on Macroeconomics Theory by Steve Williamson
and I don't understand how to isolate substitution effect.
[what I understand]
Assumption
simplified technology y=zn, z: productivity, ...
0
votes
2answers
39 views
real exchange rate appreciation
i find the topic of real exchange rate appreciation / depreciation often not very well explained.
even the excerpt below from the following accepted answer on this website is not correct in my ...
2
votes
1answer
20 views
How does the money supply grow in the long term?
For inflation to happen at roughly 2%/yr and for people to trade the same (or higher) volumes of goods, people must be trading more money. For such a trend to exist in the long term, there must be ...
0
votes
2answers
17 views
What is the relation between probability of default and country's interest rates?
Is probability of default expected to increase with increase in the interest rates set by the central bank?
1
vote
1answer
23 views
What is Return to Consumption Asset
In a paper I was reading, a budget constraint for the Euler equation for the consumption asset was described as:-
$$
W_{t+1} = (W_t - C_t) R_{c, t+1}
$$
Here $ R_{c, t+1}$ is the 'return to the ...
2
votes
0answers
29 views
Solow Model - criticism of Harrod model
I have started out reading seminal paper of Solow - Solow Growth model. It starts out with discussing weaknesses in Harrod Domar Model, a simple model of economic growth which featured prior to solow'...
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0answers
9 views
Are there any products, assests, or services that have matched inflation?
If something costs 1 dollar 50 years go, and now due to inflation, the USD has doubled, and the product now costs 2 dollars. Is there any product, service, or asset, that very closely matches ...
3
votes
1answer
33 views
Where can I get national debt data?
I'm trying to find out about the history of South Africa's government debt. However, I couldn't manage to find suitable literature or websites showing the history. It is also very difficult to find ...
0
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0answers
7 views
How is job creation measured? [duplicate]
often i see in central bank reports the number of jobs created in a country/state/province for a given quarter.
How is job creation measured?
0
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0answers
11 views
How is India able to maintain huge FOREX reserve despite large total current account deficit?
Countries with huge FOREX reserves generally also have huge current account surplus , for example - China has a FOREX reserve of over 3 trillion USD but it's CA surplus is also above of 150 billion ...
0
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0answers
9 views
Why holdings in offshore centers eventually wind up in the same pattern as those that go directly to other countries?
In this paper by Lane and Milesi-Ferretti (2008), the authors wrote:
Nevertheless, to the extent that every dollar invested by a source country in an offshore center is invested by the offshore ...
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0answers
26 views
AR(p) with white noise error term — always covariance stationary?
Is it always true that an AR(p) process with a white noise error will be covariance stationary?
1
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1answer
41 views
China - US Trade War: Holes in this analogy?
I have recently listened to a podcast by Peter Schiff concerning the China - US trade war. Schiff to me is an interesting chap; he always puts an interesting spin on things. However, from time to time ...
1
vote
1answer
42 views
When can one read the general theory of employment,interest and money?
I am a first-year undergrad econ student and was interested in reading Keynes' book. in the preface, Keynes pointed out that the text deals in the abstract and is meant for his fellow economists. ...
1
vote
1answer
27 views
On what does currency value depend [closed]
How is the currency value estimated? Why India has lowest prices to dollar? For example if you buy bread in India it will cost you 1 dollar and in USA 5 dollars
0
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0answers
32 views
Help me solve this?
Suppose the market for railing is competitive. The demand function is given by Q=120-2P, FVF projecting is active in the market and faces a cost function C(Q)=200+2Q+0,5Q^2.
a) What is the optimal ...
5
votes
4answers
103 views
Explanation Rational Expectations
I am struggling understanding the concept of rational expectations. Can someone explain in simple words the concept of rational expectations? Does someone know a good (online) source explaining ...
1
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2answers
21 views
How saving and investment influence growth in the long run?
Here are 4 points from my class.
• Because resources are scarce, devoting more resources to
producing capital requires devoting fewer resources to producing
goods and services for current ...
0
votes
1answer
44 views
Why would a rise in the discount rate stop foreign gold drain and make banks fail?
I am reading "Capitalism and Freedom" by Milton Friedman. In Chapter 3, "The control of Money", Dr. Friedman explains how the Fed exacerbated the Great Depression of the 1930s. In particular:
In ...
3
votes
2answers
69 views
Is Cobb-Douglas the only output function corresponding to a competitive economy?
Apologies if this is a rather simple question, I appreciate any guidance.
$$ Q(K,L) = AK^\alpha L^{\beta} $$
where A is a constant. Identify the conditions on $\alpha$ and $\beta$
for ...
0
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0answers
18 views
Blanchard Kiyotaki model of monopolistic competition, derive aggregate price level
I have the following set of equations from a simplified version of the Blanchard Kiyotaki model:
$$P_i=\frac{\gamma}{1-\gamma}\frac{M}{C}\Bigg(\frac{C}{m C_i}\Bigg)^{\frac{1}{\theta}} \tag{1}$$
$$P=\...
1
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3answers
73 views
How to engineer the economic system, so that an individuals self interest leads to fulfilling collective interest
So it is said that Adam Smith said that self interest leads to collective interest.
This is obviously not the case. We do not have a society that maximises the collective good*.
My question is, Is ...
0
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0answers
7 views
Currency pegged to lowest value in a 3-basket forex-market, can currency get weaker?
Firstly, this question is related to this: Theoretical - Direct Money Supply model
I am breaking down that long question into smaller chunks to make it answerable.
Assumptions:
I control 90% of my ...
0
votes
3answers
71 views
On trade, What justificaion does the USA have to accuse China of 'selling too much not buying enough from USA'
There's a trade war (dispute) going on between USA and China, and it boils down to the USA accusing China of not buying enough American products, relative to what they sell to America.
Putting aside ...
0
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0answers
7 views
Interdependence of national depts, low GDP and unemployment?
I remember that I had once long ago in school learned that there will always be significant components of national debts or low GDP or unemployment in a state economy such that one can never press all ...
0
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0answers
27 views
Derivation on the Euler equation with Epstein-Zin preference?
In Epstein Zin (1991), the Bellman equation takes the form
$$J(A_{t},I_{t})\equiv \max_{c_{t},\mathbf{\omega_{t}}} \{(1-\beta)c_t^\rho+\beta[E_tJ(A_{t+1},I_{t+1})^\alpha]^\frac{\rho}{\alpha}\}^\frac{1}...
