Questions tagged [macroeconomics]
Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.
2,361
questions
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Oil Industry: Efficiency, Equality, Externality [closed]
Let's say Biden resumed building the Keystone Xl pipeline.
The Efficiency would go up because the US would be taking benefits from its scarce resource.
Externality is more pollution output.
What would ...
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12 views
Differences between a cooperative market and privated business market
I would like to brain storm the possible differences between a market composed by cooperatives (capital owned by its workers) and a market composed by private business (capital owned by share holders)
...
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How to draw a diagram like Solow model to prove growth rate in Harrod-Domar model won't converge?
Solow model defines income per capita function f(k)=F(K/L,1) with f'(k)>0 and f''(k)<0 and proves that there must be an intersection with (gL+gA+δ)k where growth rate converges.
But it confuses ...
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1answer
32 views
How could you partition Household Food Expenditures into Producing Industries?
From the 2019 Consumer Expenditure Survey, the average household annual food expenditure was $8,169 for that year. There are subcategories such as "Food at Home" and "Food away from ...
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33 views
Is economics zero sum game in spite of climate change?
Governments show so little cooperation in achieving net zero emissions, it makes me think that economic activity is zero or negative sum game when environmental limitations are considered. Is that ...
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1answer
19 views
How is the United States net foreign wealth affected by a depreciation of the US Dollar?
My thought here is that if the dollar were to depreciate, then the value of US liabilities would decrease while the value of their assets would increase. Moreover, the US trade balance would become ...
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12 views
Data on failed entry over the past couple of decades
I was wondering whether anyone could point me towards a good starting point in order to gather facts about firm entry (esp. failed entry) over time.
A perfunctory google research session has left me ...
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What are the macroeconomic options available to China for resolving the Evergrande bubble?
Partly inspired by this Noah Smith article.
I was talking with a friend and we were trying to itemize what options might be available to the Chinese government to resolve the collapse of Evergrande.
...
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how to calculate whether a series is convergent or divergent? [migrated]
If a series is given for example
1 - 1/2 + 1/4-1/8+1/16-1/32+.... up-to infinity
how to check whether the series converges or diverges?
is there any particular formula?
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Equilibrium in an endowment economy
Consider an endowment economy with 2 agents with the same preferences defined by $\sum\beta^tlog\ c_t$ where
Agent 1 has the following stream of endowments: $(w_0,w_1,w_2,w_3,...) = (2,1,2,1,...)$.
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1answer
20 views
Economic indicators for government debt (sovereign debt)
I am looking at sovereign debt as a percentage of GDP. However, due to external factors like exchange rates, the percentage may change from one year to the next even if a government did not borrow any ...
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3answers
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Why do banks need to borrow money (i.e. bond issuance)?
When a bank gives out a loan, a simultaneous liability and asset is created on their balance sheet, and 'external' funding doesn't fit into this picture... so why do they need to borrow money?
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Why is it believed (by some) that China will be able to survive the immensely high credit-to-GDP in the future?
Did the European countries and Japan not have assets to control the debt during the financial crises era? Did these countries have foreign debt? How is the situation different for China? They owe all ...
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45 views
Optimal monetary model
An economy is populated by identical, infinitely-lived agents (there is no population growth) that maximize the present discounted value of lifetime utility given by $$U=\sum\beta^t(ln\ c_t+Al_t)$$ ...
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Tax Reduction effect on agreggate demand
Im trying to figure out what initial and additional effects would a 20 thousand dollar tax reduction with a 3/4 marginal propensity to consume would have on the aggregate demand.
I first thought of ...
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1answer
46 views
Optimal consumption for infinite number of periods and exogenous income
I have the following optimization problem:
$\max_{\{c_t, s_{t+1}\}} \Pi_{t=0}^\infty c_t^{\beta^t}$
$\text{subject to } \space c_t + s_{t+1} = y_t + (1 + r) s_t \text{ and } s_0 = 0$
How do I find ...
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1answer
766 views
Where can I find lorenz curve of countries?
I have been able to find values of Gini coefficient but have not been able to find their corresponding lorenz curves.
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1answer
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Interaction of redistributive taxes, monetary policy and the growth rate
While studying macroeconomics, interaction with taxes are not seen to importantly. I am though interested in an interaction with redistributive taxes (such as the income or the inheritance tax rate), ...
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1answer
33 views
How is the intertemporal budget constraint derived from all intratemporal constraints
Suppose an agent receives a fixed (exogenous) income every period, $y_t$, and can either spend it on $c_t$ or save it/borrow ($s_{t+1}$). Suppose also that the agent starts off with no savings or debt....
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3answers
66 views
the relationship between the growth rate of GDP, GDP per capita and the population
I was reading Capital in the Twenty-First Century by Thomas Piketty and it says the growth rate of GDP is equal to the growth rate of GDP per capita plus the growth rate of the population, and I ...
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0answers
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What is a rest-function in a Solow model?
I am trying to better understand the Solow-Swan growth model and the golden saving rate.
When searching around I came across a blog explaining the intuition differently. Instead of in the standard ...
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Cyclicality of Inflation and Price Level
Why is price level in general considered to be countercyclical while inflation is generally considered to be procyclical?
Thank you!
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1answer
41 views
How to show the identity $I = S$ is valid in these applied cases?
Say we are in a closed economy where there is no government.
It is claimed that
$$I = S$$
is an accounting identity and so it's always valid.
I find it difficult to understand why this identity is ...
5
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0answers
52 views
Optimal level of consumption in discrete time model with quadratic preferences and infinite horizon
I am trying to derive an expression for the optimal level of consumption in the basic problem:
$ max \hspace{1cm} U_t = E_t \left[\sum_{s=t}^{\infty} \beta^{s-t} \left( C_s - a\frac{Cs}{2}^2 \right) ...
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1answer
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Does global maximum of CRS Cobb-Douglas profit exist
In most macroeconomic papers it is taken as given that the aggregate prodution function is $Y=AK^{\alpha}L^{1-\alpha}$, and that the optimality conditions for inputs determine input demands:
$$
\max_{...
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Jobs Per Unit Output
I am trying to follow a report from the World Bank titled "Issues in estimating the employment
generated by energy sector activities", which can be found here: https://openknowledge....
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0answers
20 views
Laspeyres Price Index and Paasche Price Index of india [closed]
What is the value of Laspeyres Price Index and Paasche Price Index of india quarterly from 2011 to 2020
5
votes
1answer
66 views
Are there any behavioral macro models with rigorous micro-foundations?
I am looking for some paper that tries to establish rigorous micro-foundations the behavioral New Keynesian (or any other) macro models.
This is surprisingly hard, most work on this topic (like De ...
2
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1answer
34 views
Would printing money be necessary for remedying macroeconomic problems such as underemployment and overindebtedness if trade was balanced?
Printing money is often touted as the solution to the macroeconomic problems faced by developed economies today, namely lacklustre GDP growth, public and private overindebtedness and underemployment. ...
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Easy introduction to Markov processes and dynamic programming [closed]
I am taking advanced macro course in Fall. Could you please advise me a simple introduction to Markov processes and dynamic programming? I mean easy. Thanks!
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1answer
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Is there an empirical model for studying contemporaneous feedback relationships?
In a DSGE model, monetary policy shock (Taylor rule style) increases interest rate. So output and inflation falls, which feedback contemporaneously to the interest rate. Thus, interest rate ($i_t$) ...
2
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1answer
30 views
Large National Debt by borrowing money from foreign sources
I have a question about the greater severity of large national debt caused by borrowing from foreign sources.
I am reading a book about elementary Economics and am currently on a chapter discussing ...
2
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1answer
29 views
The link between economic growth, inflation, interest rates and fiscal deficit
I want to ask a question about how economic growth, inflation, interest rates is linked to fiscal deficit.
I was reading a book on introductory economics and the following passage came up:
If a ...
4
votes
2answers
86 views
Relation between budget deficit and inflation?
In Iran we have had a high inflation rate for several decades (usually above 20 percent). Some of the top economists of the country say that it is mainly because the government spending is ...
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1answer
27 views
Aggregate demand and Real GDP
I understand that aggregate demand is the demand for all goods and services in an economy. However, I later found out that aggregate demand and real GDP are calculated using the same formula, so does ...
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1answer
53 views
Does this model of housing economy have a name, and if so, what are the common critiques?
I've been thinking about housing and the problem of rent recently and I came up with a simple idea that I'd like to explore further: what if renting a property transferred some ownership over time? ...
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1answer
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Theoretical equivalence, experimental distinction between GDI and GDP
Forgive me if this is a naïve or redundant question, I'm about 24h into my study of economics--but I've been trying to research this question and can't figure it out. Why does the national spending ...
2
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1answer
110 views
GDP doesn't add up in FED data - why?
To visualise the formula:
$$Y=C+I+G+NX$$
I downloaded the FED data and plotted it, only to discover the two curves progressively diverge (see chart below).
What am I missing?
thank you!
$Y$ = https://...
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Controversy surrounding the Fiscal Theory of the Price Level (FTPL)
I recently started reading a draft of John Cochrane's book on the Fiscal Theory of the Price Level. In the preface he states that the "[...] theoretical controversies are over." However, ...
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IS-LM : monetary policy in SOE that exports inferior goods
If I follow the IS-LM model (or some derivative of it), a small open economy can really only use monetary policy to change GDP in the short term.
According to the model (or one of its spin-offs), if ...
3
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1answer
188 views
Is there Modern Translation Book for Wealth of Nations?
Is there a New/Modern English Translation of Adam Smith "Wealth of Nations"? I cannot locate any online, it is a great read, just trying to understand it better.
The old/classical style of ...
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1answer
117 views
Did Capitalism and Adam Smith Support a Central Bank?
Does Adam Smith and Capitalism support a Central Bank/Federal Reserve?
I am trying to read through the book "Wealth of Nations" to understand. Having a central/regulatory figure dictate ...
2
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1answer
67 views
What is an 'economic reason'? in relation to marriage?
I'm taking a economic course over the break and with no prior experience with economics, I'm struggling with coming up ideas for a prompt in relations to why people marry.
I thought the idea of ...
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0answers
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Is there any macroeconomic model based on Olson's collective action theory?
I've recently learned about Olson's Collective Action Theory and I'm interested in mathematic models of economies that follow the theory's axioms. I tried finding a general equilibrium macro model ...
2
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1answer
48 views
Proxy for financial crisis
I'm trying to do some empirical work and trying to find a good proxy for the financial shock of 2008. My first idea was to consider the change in real interest rate between 2007 and 2008 but I don't ...
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When the LM schedule is vertical, a change in fiscal policy (government spending) only increases the interest rate. What’s the intuition behind this?
As the government spending increases, the aggregate expenditure increases. This results in the increase in income.
Now in the money market as the income increases, transaction demand for money ...
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Overheating in Short Term Equilibrium
My text Economics by Hall, Lieberman, gives a model of $\text{AE}$ (aggregate expenditure) in the short term as a function of $\text{GDP}$, $\text{MPC}$ (marginal propensity to consume), and ...
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1answer
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Help with derivation
I am trying to understand how the authors jumped from these two equations:
$k^d=k^s$
$k^d=ln[\bar{l}\alpha^{\frac{1}{1-\alpha}}]-\frac{1}{1-\alpha}\tilde{R}$
$k^s=ln[\bar{l}(1-\tau)(1-\alpha)\alpha^{\...
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2answers
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Where we call GDP aggregate demand or aggregate supply in VAR models is our choice?
In the attached picture below, shocks associated with GDP are demand shocks and shocks associated with inflation are supply shocks.
Here, shocks associated with GDP are rather supply shocks, and ...
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3answers
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What causes inflation?
Given the recent increases in the price of many things in the US (lumber, used cars, gasoline, etc…) I have begun thinking about what is going on at a macroeconomic level. My first thought is “it’s ...
