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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1answer
16 views

What is business cycle frequency?

What does the term 'business cycle frequency' mean? Annual, quarterly, or monthly frequency? Thanks. I have yet found a definition on google.
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Does net exports has to do with borrowing and lending?

In my course notes, it says that "when net exports is negative it means that the country is borrowing from other countries" but I do not get it if net exports is negative that only means ...
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Social Planner problem: two period

The production function is $F(K_t,N_t)=AK_t^\alpha N_t^{1-\alpha}$ and depreciation $(\delta)$ is equal to 1. The given preferences are as follows: $$U(c_1,l_1,c_2,l_2)=\gamma log(c_1)+(1-\gamma)log(...
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Bellman Equation with Two Discount Factors

For the following social planner's problem $$ \max \mathbb{E_{0}}\sum_{s=0}^{\infty}\beta_{1}^{s}(\alpha U(C_{s}^{1}))+\beta_{2}^{s}((1-\alpha)U(C_{s}^{2})) $$ $$ s.t.\ \text{some constraints ...
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Mathematical question in macroeconomic task

I am currently working on a project where I want to explore how changes in a couple of currencies affects the income for my countrys exported fish. My country (Norway) sells it fish in 4 different ...
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Did the Bank Of England say QE doesn't work?

https://www.bankofengland.co.uk/working-paper/2020/does-quantitative-easing-boost-bank-lending-to-the-real-economy Staff Working Paper No. 883 Published on 14 August 2020 From the conclusion: If the ...
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Help to find China Data

do you know where can I find data about the R&D expenditure of china from 1976 until 2020?
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Why does US equities valuation have the downward pressure on USD?

While making readings on economics I came across a sentence: ..large valuation gap that has opened up between US equities and the rest of the world. This could help bid up non-US equity valuations and ...
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1answer
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What is the resolution down to which the annual inflation value can be controlled?

Judging by previous posts in the site, the inflation target is set annually to 2% by the Federal Reserve. Regardless of the reasons behind this choice, I am curious to understand how precisely can the ...
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Does Modern Monetary Theory (MMT) provide a useful insight into how to manage the economy?

According to advocates of MMT, the primary risk once the economy reaches full employment is inflation, which can be addressed by gathering taxes to reduce the spending capacity of the private sector. ...
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The economic function of inflation [closed]

I often see people who ask how much inflation is a good amount of inflation, or why deflation is bad. My understanding of the systemic role of inflation (and please correct me...), is to neutralise ...
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1answer
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Is GDP the market value of goods consumed or goods produced in a time period?

Definitions across various resources state that GDP is the market vaue of all goods 'produced' in a certain time period. But while calculating GDP by expenditure method, consumers' spending is one of ...
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Why is deflation bad for economy?

As now many people are talking about the inflation of US dollar on the account of the COVID-19 pandemic and the printing of trillions of US dollar bills, the price of decentralized cryptocurrencies ...
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It is argued that in optimization the first part of the second-order condition appears opposite to their interpretation? [closed]

It is argued that in optimization the first part of the second-order condition appears opposite to their interpretation
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Constant to the power of t in steady state

I am wondering how to get the steady-state for the following Euler equation. I know that we can get rid of time in subscripts. However, here I have a constant (a) to the power of $t$. Does anyone know ...
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Increase in money supply when price are flexible in the basic new keynesian model

I would like to know what would be the effect on price and quantities of an increase in money supply in the basic new keyensian model. What happen if price are fully flexible ? What if prices are ...
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1answer
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inflation with the seignorage revenue [closed]

In the short run it may be unchanged, but if people expect higher inflation, the nominal interest rate will increase and velocity will also increase, reducing the seignorage in case Hi, I am nit ...
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1answer
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How to define the natural rate output

I'm following Woodford's Interest & Prices to derive the microfundations for a New Keynesian model with staggereed prices. I defined the utility function and disutility function (1.1 at page 144) ...
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1answer
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Help with AP Macroeconomics FRQ [closed]

I am a senior in High school and am taking an AP Macroeconomics course. I just took an FRQ and received an F on it. I asked my teacher multiple times to explain why my answers were wrong, but to no ...
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1answer
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Basic New Keynesian model with flexible price

I would like to know what would be the response of variables in the Basic New Keynesian model but with flexible prices (ie not with Calvo pricing). For example I have troubles to see how having ...
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1answer
21 views

Macroeconomic model or knowledge base representing connected industries in the world

I'm looking for data (model, Expert system, knowledge base) that describes how different industries and countries interact with each other. And the nature of the relationship between them. An example ...
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What is the branch of economics relevant to {norms/preferences -> markets -> benefits/costs (pricing/power/resources)} [closed]

What is the branch or branches of economics relevant to the following scope of inquiry: If a number of A sellers and B sellers exchange A's perceived value/utility/preference in criteria X when it ...
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1answer
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What happens to an MBS if all the underlying mortgages are fully paid back by the borrowers much before the maturity date?

What would happen to an MBS (mortgage-backed security) if hypothetically speaking all the underlying mortgages were fully paid back by the mortgagees (borrowers), much before the maturity date? I ...
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1answer
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Solow model: Partial derivative of k* with respect to g

Given the solow model $sf(k)=(n+g+\delta)k$, written as $$F=sf(k^\star)-(n+g+\delta)k^\star=0$$ I am trying to find the partial derivative of k* with respect to n Here is what I've tried: I use the ...
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What is the 'gold standard methodology' in macroeconomics research?

What is the 'gold standard methodology' in applied macroeconomics research? In drug discovery research, for example, there are many methodologies, but RCTs are the gold standard, right??...like the ...
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Loosely speaking, are all modern economies 'Keynesian' in their stance on spending during downturns?

Keynesian economics is defined as: increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Do all modern economies adopt a Keynesian ...
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What is the no ponzi condition for this representative consumer problem? Tags: Initial condition, no-ponzi game

This question is following Farhi et.al. 2014's consumer budget constraint modified to add a government bond and removing money. A simplified version is given below which is pertinent to the question. $...
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3answers
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How can an economy pay for all the products it produces?

How can the totality of an economy pay for all the products it produces, if the initial amount of money in the system (before the profits on all of the products is realized) is less than the amount of ...
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1answer
25 views

Imports not used in the country, still counting in the GDP calculation?

When we calculating GDP we use the given formula $GDP = C + I + P + X - M$ Here $M$ means the imports. My question is: What if I am not currently using the imports. For example I might have by the ...
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1answer
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What does it mean to identify structural shocks in macro models?

What does it mean to identify structural shocks in macro models? Sometimes, it seems to mean just disentangling VAR innovations into 'structural' shocks which may or may not have any economic ...
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Structural shocks in economic models are unobservable and country-specific?

Let's consider an exogenous oil price shock ($e_t$) as an example in the following equation $oil_t = \rho \; oil_{t-1} + e_t$, where $oil_t$ is one variable in a VAR system. We normally want to ...
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1answer
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How did investment go from exogenous to endogenous in the IS/LM model?

Context: I am currently taking an introductory course to macroeconomics and we are on the topic of Keynesian Economic and the IS/LM model. Initially we saw that the investment (I) component of ...
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1answer
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Government stimulus

Where does the money come from to pay Americans such a generous stimulus? What is the economic benefit? Is there something that is not visible to everyone else? If we give all this money to everybody ...
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1answer
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Jordi Gali Book First Edition Page 47 (need help for derivation)

The below image is from P.47 of Monetary Policy, Inflation, and the Business Cycle by Jordi Gali. My question is "how can we derive the equation (15). If (15) is a correct equation, my guess is ...
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1answer
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Search and Matching model with 2 agents?

I would like to know if you know any model with Search and matching framework (Mortenses-Pisarides style) with 2 types of workers (like Ricardian and rule of thumb consumers for exemple) ? I would ...
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What is the effect of currency depreciation on import prices?

In Macroeconomics: A European Perspective (3rd ed., Blanchard, Amighini and Giavazzi), when discussing the reason for differences in the GDP deflator and the HICP for the EU, it states the following ...
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What does taxes less subsidies mean?

What does 'taxes less subsidies' actually mean? It feels like it is grammatically incorrect. I have assumed it to just mean taxes minus subsidies.
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How does everyone not become poor over time?

Look at the whole world --the union of all goods and services and workers and customers. Everyone who is a customer is a worker somewhere (they had to get the money to be a customer somehow). But not ...
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1answer
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Euler equation guess and verify

So I have the Euler condition written as follows: $$\frac{1}{k_t^a-k_{t+1}}=\frac{a\beta k_{t+1}^{a-1}}{k_{t+1}^a-k_{t+2}}$$ and it says that $k_{t+1}$ takes the form $gk_t^a$, where g is an unknown ...
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Advice on method for analyzing the effects of increase in minimum wage

As a hobbyist and generally curious person with a lot of free time at home, I was curious what would be a good method to analyze the effect of an increase in the minimum wage of a country if you only ...
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2answers
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UBI - Raising the Poverty line

Imagine if a country starts to pay $1000/month to all citizens. Then my landlord knows that I can afford to pay a bit more rent from next month. So will my favorite ice-cream place, my barber and in ...
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About marginal cost setting on Jordi Gali's work

I'm studying Gali's work with the paper(or book?) which is "Jordi Gali, Monetary policy inflation and the business cycle_An introduction to the new keynesian framework(2015)" and wonder one ...
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New Keynesian IS curve: question about time dependence

A simple version of the new-Keynesian IS cuve is given as follows: $$ \ln Y_{t} =\ln Y_{t+1} -\frac{1}{\theta} r_t. $$ Here $r_t$ is the real interest rate and $1/\theta$ is the cross elasticity of ...
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Why LRAS is not affected by increase in cost of production?

Problem: in my course notes it's mentioned that AS is only affected by costs in the short run but not in the long run which does not make sense because if cost of production increase suppliers cannot ...
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Probability transition matrix as a function of the variance in Matlab?

I am working on Probability transition Matrix on Matlab. I Have say 5 points (states) of discretized productivity grid. I would like to have two matrix of probability transition subject to the ...
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1answer
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Is IS-LM still used in research or we learn it just to understand basic macro?

Since i had my "Introduction to advanced macroeconomics" and discovered DSGE i've been wondering if IS-LM is used in research, i know it was used in the 80's or so, but now?
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Labor Supply- how to do comparative statics?

Consider an economy with a competitive industry where the representative firm's production function takes the form of a Cobb Douglas production function $Y=z K^{\theta} L^{1-\theta}$. $z$ is an index ...
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max{x1,x2} where P1not=p2

I have seen min{x1,x2} functions representing perfect compliments but have never seen a max{x1,x2} function anywhere in my book or lectures, I also have never seen anything about p1 not equaling p2. ...
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Effects of a decrease of the policy rate on net exports

We've recently worked in class with the IS-LM-UIP model (where UIP stands for the uncovered interest rate parity). The central bank chooses the policy rate. Hence, the LM curve is horizontal. The IS ...

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