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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How is the GINI coefficient half the relative mean absolute difference?
I've tried to derive a proof myself and have looked through a lot of sources but can't seem to find an understandable mathematical explanation/proof for why this is the case. I found one at(https://...
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1answer
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Max of a profit function: partial derivative of an integral function?
I am struggling with the maximization of the following profit function in a New-Keynesian model. Here there is the FOC.
$$\frac{\delta}{\delta Y_t(i)} P_tY_t- \int_0^1 P_t(i)Y_t(i)di = \frac{\delta}{\...
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1answer
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Are rational expectations in economics purely forwards looking, or can they have backward looking components?
Are rational expectations (Muth, Lucas, Kyland and Prescott) in economics purely forwards looking, or can they have backward looking components?
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How would Russia winning the COVID19 vaccine race impact its economy? [closed]
According to reports (see links below), Russia may be the first country to declare victory in the race for a COVID19 vaccine and distribute it on a mass scale.
Whether they will be or won't be, isn't ...
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What industries, if any, are best when nationalized/government-run?
In free-market economics, private firms are said to be more efficient and better for consumers as competition between private firms in an industry breeds innovation, low cost (for consumers), and ...
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What steps can a country (or island) take to prevent another Turkey? [closed]
I'm hearing a lot about what's happening to Turkey and its economy. High inflation, meager foreign currency reserves. Sounds like normal economic issues any other country can face.
What steps can a ...
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34 views
Is it legitimate to assess the resilience of industries and sectors to covid19 through the stock market? [closed]
I would like to assess the resilience of some sectors in Europe (for practice and also make a project to show in case I want to go to a better uni) but I honestly lack data, and it seemed to me the ...
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1answer
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What does “writes a check to Congress in exchange for them” mean in this context?
On page 192 of the 5th edition, George Edward Griffin begins to describe
the "Mandrake Mechanism", chapter ten, in "The Creature from Jekyll Island".
First, the Fed takes all the ...
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1answer
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Literature on DSGE models featuring a financial sector
I recently read a ECB primer on DSGE models featuring the financial sector and became interested in the field. I also started to read some of the earlier literature in that field (e.g. Gertler & ...
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1answer
40 views
What does full employment mean?
I am a bit confused about the term "full employment".
I am currently learning about the labour market model, and how that is influenced by changes in aggregate demand. My textbook states &...
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Effects on Early International Travel Ban and Economy
Can't find articles regarding on this. Had the country set up an early international travel ban to avoid this Covid-19 pandemic, can that country survive thru local businesses after 4-6 months or more ...
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Deriving Money demand function with utility function [closed]
What is the Money demand function when the utility of money for the household is given by u(Y, M/P)= 0.5lnY + 0.5ln(M/P )
I tried solving by differentiating and got it equal to Y but the answer is Y/i....
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When is the upward economic convergence in the EU estimated to happen?
Although the regional cohesion, i. e. the socio-economical convergence of the East and the West has been one of the EU's main goals, some economists seem to dispute there's any evidence for them being ...
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1answer
63 views
Do countries with centrally-planned economy have Entrepreneurship as a factor of production?
Let's don't count self-employed people without other employees (like "lone wolf" craftsmen) and people who have an illegal business as entrepreneurs. By centrally-planed economy I mean an ...
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1answer
29 views
Why does the Loanable Funds Market model use the real interest rate instead of the nominal interest rate?
As far as I understand, the majority of loan contracts specify a nominal interest rate, NOT a real interest rate. So a hypothetical loanable funds markets would have people suggesting potential ...
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How are recessions even possible if its impossible for banks to lose money?
When a bank issues a loan, the money must end up with another bank. Therefore, the banking system as a whole can never lose money. Only the dumb banks which make loans that arent repaid can ever lose ...
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1answer
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Can anyone help me understand the Motrtensen-Pissarides model?
I am seeking help with the Mortensen-Pissarides model in discrete time? Basically, I was given the following in class example (which we didnāt complete do to time constraints associated with the end ...
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1answer
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Best history of macro book?
I'd like to know if you know some book that summarize the history of macro ? I'm in Master (after undergrad) so I don't ask for beginner's book. I've begun to read "a history of macroeconomics ...
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Why do all/majority of loan contracts charge nominal interest rate instead of fixed real interest rate?
As far as I understand, all/majority of loan contracts charge nominal interest rate, there are (almost?) no loan contracts that charge fixed real interest rate. Why is it so? Normally I would expect ...
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1answer
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Still donāt understand why a trade deficit must be financed by foreign borrowing (even after reading other answers)
Maybe my understanding of how the real world works is now clouding my ability to understand the theoretical because I aced this stuff in college, but now canāt wrap my head around it. Yes, Iāve read ...
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1answer
42 views
Why does a current account deficit contribute to making a country a “sitting duck” for currency speculators?
George Soros had this to say about the factors surrounding his famous short of the British pound:
The U.K. had a large current-account deficitā¦, modest FX reserves and
no capital controls to rebuff ...
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1answer
26 views
What is the probability of an unemployed worker receiving no job offer during a time period?
we are currently covering one sided search models and I had a question for you all. I kind of understand the raw calculus behind finding the probability of a job offer over a time interval h, but what ...
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2answers
51 views
What was the Rogoff & Reinhart spreadsheet mistake?
In class our professor said that the Rogoff and Reinhart research on growth and debt was discredited due to spreadsheet mistake. What was this mistake? Also did they perform their research in excel ...
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1answer
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What is an estimate of the value of the world's assets?
Gross world product is on the order of 80E12 $ per year (PPP). Where can I find an estimate of the net value of the world's assets (companies, properties, infrastructure...)? Preferably with some more ...
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2answers
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Does the concept of Capitalism increase the net wealth?
I am currently going through a video by Peter Schiff from the occupy Wallstreet period where he is talking with the protestors at the time. I'm pretty early in the video and Mr. Schiff makes the ...
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1answer
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How can a government save, if it has deficit?
I am reading an IMF paper about China's debt (link) which says:
ā Despite a large augmented fiscal deficit of 10 percent, fiscal savings remain higher than other countries, resulting from the biased ...
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How would consolidation in the brokerage space make things better for banks?
There is a bit from an article I don't quite understand:
China has been eager to whip its brokers into shape. Officials want
capital markets to lessen the burden on banks, which last year
provided ...
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0answers
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GDP accounting: Insurance spending belong to which part of GDP?
We know that $GDP = C + I + G + NX$, where $C$ is household consumption and $I$ is private investment. I don't know whether insurance spending (e.g life insurance) belongs to $C$ or $I$.
I've googled ...
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Policy ineffectiveness proposition
Suppose,
the Aggregate supply is given by the Lucas Supply Curve -
$y_t = Č³ + b(P_t - E_{t-1}P_t) + Ī¼_t$
where $Ī¼_t$ is stochastic supply shock (following standard normal error properties).
Aggregate ...
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4answers
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Are there historical cases of country A printing the currency of country B for the main purpose of economic warfare?
I recently read in a news article that a large amount of Libyan banknotes printed in Russia were seized in Malta following an order coming from the USA. Both Russia and the USA have geostrategic ...
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1answer
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Are taxes,subsidies and social money transfers(i.e. welfare) accounted in money velocity?
As far as I know, money velocity is an average amount of times a typical, say, dollar, gets spent on goods during 1 year. So if it's spend N times to pay for goods, then money velocity equals N.
But I ...
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2answers
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What are the determinants of the natural rate of interest and how market rate converges to it?
I'd like to know how is determined the natural/neutral rate of interest. Moreover, how the market rate can converge to it ? If you have some references it would be great !
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How could Euro bonds serve as a “safe haven” asset in the long run?
The German Bund has been the major safe-haven asset in the Eurozone despite the advent of the Euro. However, I noticed that there is mounting anticipation around a potential 750 billion worth of Euro ...
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Log-linearization of an intertemporal budget constraint
I'm trying to recreate the paper "Learning about Monetary Policy Rules when
Long-Horizon Expectations Matter" by Preston.
At one point he says that he log linearizes the intertemporal budget ...
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What did Krugman mean by “cult of amauterism” when describing why Britain fell behind in economic growth race?
From Krugman's macroeconomic textbook:
Itās one of the classic questions in economic history: Why did
Britain, the home of the Industrial Revolution, by far the worldās
leading economy for much of ...
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1answer
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Is Currency Devaluation a cause or effect of interest rates?
I understand that Federal bank/Goverment can manipulate the currency market and devalue its currency by printing more money or buying foreign currencies/assets (essentially increasing the supply of ...
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Why is FDI included in GDP computation but not in GNP? Similarly why is FPI included in GNP computation?
I know the difference between GDP and GNP is that the former is confined to domestic borders and the latter to nationals across the world.
I also know that FPI is shorter duration and more volatile ...
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1answer
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How buying bonds indirectly from the government prevents the central bank from financing government deficit?
From Krugman's macroeconomic textbook (highlighting is mine):
"In an open-market operation the Federal Reserve buys or sells some of
the exist- ing stock of U.S. Treasury bills, normally through ...
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1answer
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Why is sovereign rate a reference?
I would like to know why we always focus on 10 years sovereign rates when we talk about interest rates ?
Let me clarify. I'm reading a paper from the Bank of England that emphasizes the fact that ...
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2answers
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How do I predict Macroeconomic indicators?Or are there any free resources where I can get the predicted values?
I am building a time series forecasting model in which I am considering the macroeconomic indicators as predictors.I wanted to ask 2 things
How do I get the future values?I have seen trading ...
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1answer
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What are some examples of goods that entrepreneurship-intense?
Entrepreneurship is considered to be one of factors of production (the other factors of production are capital, labor and land).
According to HeckscherāOhlin model, a country that has an abundant ...
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1answer
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What is the characteristics of economic downturn and which countries experience economic downturn from 2010 to 2018?
I would like to know the characteristics of economic downturn. Is downturn the same as recession? and which countries experience economic downturn from 2010 to 2018?
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1answer
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How are historic economic statistics calculated?
Sources like Our World in Data can have statistics that date back hundreds of years. Specifically, the Our World in Data source has a graph of GDP Per Capita in England dating all the way back 1270. ...
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1answer
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Does levying a new tax on production increase GDP?
Consider a society with no taxes on (e.g) commercial land ownership.
One day the government impose a small tax on land owned by the foresting industries. I would assume that prices on goods produced ...
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1answer
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Increased production costs associated with increased output produced? Why do firms have prices increase with the SRAS or Supply Curve?
In my textbook, it said (this is for SRAS and AD, but I'm also going to apply this a bit fo microeconomics.. sorry for mixing, but my question applies in both ways, I believe) "The average price ...
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1answer
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Would directing more money to science and research and development be an effective response to recessions?
Typical responses to recessions is to follow Keynesian economics and support demand. Would directing money towards science and research and development be a better long term solution to recessions ...
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2answers
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Need examples for confusion about rent-seeking. Who is the seeker and what is the rent?
Please answer assuming I have no background in economics. I keep coming across this term in various articles (Example) but get more confused every time I look up what it means.
I have read about the ...
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1answer
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How to determine a corner solution? Growth Model
I'm working on a paper called "Fertility clubs and economic growth" of Ahituv and MOav (linked below) and arrived at this point:
The paper shows three optimal conditions respect to ...
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2answers
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Why did us coal production peak in 1929 and 2008 [closed]
Hint
Its because resource depletion causes recession
If it's not then answer
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1answer
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AR(1) in Discrete Version of Stochastic Growth Model
If I assume a stochastic growth model in discrete time and the production function is defined as $F(K_{t}(s^{t-1}), L_{t}(z^{t}))$ where $z^{t}$ is history of the technological shock up to time $t$. A ...
