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 Did The Coronavirus Market Crash Cause Excessive Price Rises Of Luxury Goods?

The COVID-19 pandemic had caused the unemployment rate to rise quite significantly in many countries. Furthering this, most countries are facing economic crises, most notably, the United States with ...
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How to keep a currency stable with mass and sudden increase in population [migrated]

My question is not with reference of a state bound currency, but like lets say the population on earth just increased by a significant amount in very short time period. Like an increase of 7 billion ...
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Problem 11.15 in Romer in Advanced Macroeconomics 4 edition

I'm a little bit confused about the answers proposed in the solutions manual to the problem 11.15: In the model of delegation analyzed in Section 11.7, suppose that the policymaker’s preferences are ...
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Effect of a rise in AS and a larger rise in AD on price level and output

In the new classical model of AD and AS, if there is a rightward shift in both AD and AS, but the increase in AD is larger, will the growth in the price level be greater than the growth in output? ...
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Human Rationality and Marginal Utility

Does marginal utility consider human irrationality? For example, if the marginal utility of product x > price(x), is the human certainly going to purchase product x is he/she is aware of it?
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Hicks–Hansen model (IS LM) [closed]

If the short-run IS-LM equilibrium occurs at a level of income above the natural rate of output, in the long-run output, will return to the natural rate via A. an increase in the price level B. a ...
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Right-to-manage wage bargaining (simple algebraic steps)

I am following (and trying to understand) a paper where the wage of unskilled workers is determined as the outcome of wage bargaining between a single union and a single firm in a right-to-manage ...
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Is is possible that two economies have the same real interest rate, same GDP growth, but different inflations?

This is just a conceptual thought experiment. Is it possible that two countries have the same real interest rate, same GDP growth, but different inflation, one higher, one lower? If that's possible, ...
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Is Khan Academy wrong about inflation?

In Khan Academy's macroeconomics course, they present the following short story: One morning, everyone in the Land of Funny Money awakened to find that the monetary value of everything had increased ...
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Economic consequences of taxing every dollar in the bank rather than earners alone

EDIT Motivation: There is a clear distinction between human's "basic needs" and "wants" if not, every govt should have its own distinctions. The point is, that each Govt should be ...
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What are the market frictions?

What are the market frictions which affects the market illiquidity? I would like to learn about friction which impacts the illiquidity measures and the illiquidity discount. For instance, I know those ...
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Are High Inflation Rates In Foreign Countries Unrelated to High Inflation Rates In The United States?

This recent question on politics.se is asking about the cause of high inflation in the United States. One of the statements made in the question is: ...since many countries are also experiencing high ...
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Chain effects when Money Demand is greater than Money Supply

Here is an example graph of Money Market Equilibrium The chain effects when interest rate is 8% are : Excess Demand for Money => So, People would sell Bonds => Bond Prices goes Down => ...
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Who decides the conditions on the IMF loans?

On one hand, I've seen a statement where the IMF states that the conditions to a loan is to designed by the government. However, in a paper I've seen that the IMF enforces conditions. Is one of the ...
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How to calculate level of utility in a autarky economy and open economy? [closed]

Our class was assigned this question before the start of a course to show us what kind of questions we would be dealing with in the course. He didn't give any instructions and I wasn't able to find ...
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Solve Value Function Analytically

The context is the Schumpeterian growth model with incumbent innovation (see Aghion, Akcigit, Howitt 2014 Handbook of economic growth): the value function is $$ r V_{t}(n)-\dot{V}_{t}(n)=\max _{z_{i} \...
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Why did economic forecasters get inflations predictions so wrong?

I come from more of a statistics and applied math background, but I am interested in issues of social science. I have been trying to understand why economic forecasters or forecast models seems to ...
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Does money need to fulfill all three functions (store of value, medium of exchange and unit of account) to be considered money?

It is often suggested the money fulfills several functions, including being a store of value, a medium of exchange and a unit of account. However, I am not sure if the implication here is that money ...
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Emerging Market Currencies vs. Developed Currencies during Business Cycle

Emerging market currencies usually outperform developed currencies (USD, Euro, etc.) during the late stage of the business cycle (falling growth, rising inflation) because they are much more ...
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The Dollar-Commodity Relationship

Typically people associate a strong dollar with weak commodities and vice versa because that is what they are priced in, and a falling dollar makes it cheaper globally. But if there is a supply ...
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Mistake in Wikipedia article on Fixed exchange rate system?

I think there is a mistake in the following Wikipedia-article: https://en.wikipedia.org/wiki/Fixed_exchange_rate_system at figure 2 and 3. I think the ECB has to BUY (not sell) the dollars as in point ...
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Calculating home bias in trade

I want to make a simple estimation of home bias in trade within the EU countries by using aggregated data from CEPII dataset Link: http://www.cepii.fr/CEPII/en/bdd_modele/bdd_modele_item.asp?id=8 I ...
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Why did money stop being backed by precious metals?

I am by no means someone educated in economy, but I like to learn about it. I am trying to understand and grasp why FIAT money became so popular after Nixon 'ended' the Bretton Woods system. Why was ...
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What constraint is there on velocity of money?

MV = PY I am trying to develop an intuitive understanding of it. M = Money Supply, V = Number of Transactions, P = Average Prices, Y = Output/Income. The equation seems to suggest that if money supply ...
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Macroeconomics and microeconomics

Can we say macroeconomics is top down approach and microeconomics is bottom up approach .Is there any relation/connection between macroeconomics and microeconomics.
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Fundamental knowledge about invest, stock and economics for self learning [closed]

I am not expertised in the field of economics and stock so I do not know anything about invest. Would anyone please recommend any book/textbook for the initial leaner to get understanding of all these ...
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Fed's sales of government bonds and its effects on banks' assets

If a central bank sells bonds, theoretically, the money used to buy those bonds is taken out of the deposit accounts of the country's banks. This can reduce the reserves the banks are required to have,...
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What would be some of the most basic and universal economic principles (independent of the school of economic thought)?

Comparing the principles of the neoclassical, Keynesian, neo-Keynesian, post-Keynesian and other schools, it is difficult to see a consensus on certain universal principles. There are ideas and ...
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who exactly determine market price?

I am aware it's all about supply and demand When a lot of party buying USD with EUR, USD price will increase. EUR will decrease it's stand against USD. And vice versa But who exactly determine the ...
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Which empirical correlations are known between the velocity of money circulation and economic factors?

Usually the velocity of money is calculated as a ratio of GDP (or similiar) over a monetary aggregate (typically M2). But, it is debatable whether that simple ratio is really measuring the rate at ...
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How will world economy run when we run out of oil reserves?

Oil is a significant component of world's economy. Various wars have been allegedly fought over oil. But, it is a limited natural resource. Our standards of living have gone up, thanks to ...
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Calculating profit from price and cost

For a given item, if we know that the equilibrium price is 400 and the cost of manufacturing quantity $x$ of the item is $2x^3+900$, then how can I find the profit? My initial thoughts are that this ...
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Can someone please explain this housing prices equation?

Can someone please explain to me the following formula from this paper ? It's on the end of page 16 and the beginning of page 17. I don't know if it is asking too much, but I am looking at these ...
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capital gain tax and lump-sum transfer payment Under the perfect market benchmark

Under the perfect market benchmark where I assume that there is no trade and agents are identical, Can there be capital gain tax and lump-sum transfer payment? or, there is no capital gain tax and ...
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What is the impact on US total debt interest expense if interest rates were to rise by X bps?

What is the impact on US total debt (eg. the "Total US Debt" figure here) interest expense -- ie. the combined expense for both the Federal gov as well as individuals -- going forward w/in ...
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What does omitting capital from production function assume about capital?

We have two production functions, one $F(L)$ with labor as only factor of production, the other also includes capital $F(L,K)$. What do we assume about capital in the first case when we omit it from ...
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Sims Method on Julia and Dynare

im asked to solve this model by hand and then compute it in Julia using Sims method. My problem is, Sims methods works on a equation that has A and B, such that B is not invertible so it works on QZ ...
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Risk aversion using multinomial choice model

Recently, I have stumbled upon this paper by R. Zhang. It introduces binary choice model to compute risk aversion equations for the natural selection process. My idea is to do something similar but ...
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Transversality Condition Requires Constant to be Zero

I'm a little confused. In Barro and Sala-i-Martin (2004, p. 208), it is mentioned that the transversality condition requires the constant to be zero, i.e. \begin{equation} \lim_{t \rightarrow \infty}\...
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How to view GDP as a network graph?

I was looking at the GDP by industry data at https://apps.bea.gov/iTable/iTable.cfm?reqid=150&step=2&isuri=1&categories=gdpxind I'm curious how to view all these industries in a network. ...
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Why is there increased speculation that America might go into a recession ? If they do will the rest of the world also face downturn?

Recently there has been increasing speculation regarding USA going into recession (since rate hikes can cause recessions): https://www.washingtonpost.com/business/2022/05/19/recession-economy-markets/ ...
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Is it true that temporary and permanent fiscal expansions do not have different effects under fixed exchange rates?

In both cases: Basically, since a government is under obligation to fix the exchange rate: In the sort run, After DD's shift to the right, AA will be shifted to the right by increasing money supply. ...
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Best source for interest payments and upcoming maturities for sovereign external debt?

I am looking for data on a country's interest payments and upcoming maturities on public external debt in a given year, e.g. how much foreign currency the Ukrainian government will need this year to ...
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Where can I find capital outflow data?

I'm studying capital outflow and I need to compare its growth from 1990 to 2014 in different countries. I can't find the data, please help
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Comparison of the average income of ODA recipients and the overall income contribution in the last 5 years

I need some help with my economics assignment. I need to make a graph that compares the average income of ODA (official development assistance) recipients and the overall income contribution in the ...
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Arrow-Debreu Market with Uncertainty

I am reading some lecture note on stochastic macro model. Say an endowment economy with agent $i=1,2$, who receive the random endowment each period $e_{t}^{i}\left(s^{t}\right)$ where $s^{t}=\left(s_{...
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Why do reserves increase when the Fed buys bonds? (Introduction to Macroeconomics)

A question asks, "If the federal funds rate were above the rate the Fed had targeted, the fed could move the rate back towards its target by _" and then the options are buying/selling bonds, ...
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What does New Trade Theory say about the effect of trade on (income) inequality?

The Heckscher-Ohlin model and Stolper-Samuelson theorem make predictions about the effects of trade on the distribution of income within countries. What does New Trade Theory say about this?
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Savings = Investment. High interest rates stifle investment. High interest rate encourage savings. Isn't this a contradiction?

If savings = investment, then by definition, higher interest rates encourage savings and hence more investment. But when it comes to monetary policy, central banks increase interest rates in order to ...
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Unemployment only differs from its natural rate if expected inflation is different from actual inflation - why?

This is a quote from Mankiw. No further explaination is given and I'm having trouble working through the logic behind this statement. Could someone explain the process behind this assertion?
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