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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Are bailouts destabilizing the global economy?
I saw this posited in this WSJ opinion piece here
Notes on the Fed
In 1998, engineering a \$3.6 billion rescue of the giant hedge fund Long-Term Capital Management.
In 2001, slashing interest rates ...
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Dispersion of housing prices in Hsieh And Moretti (2018)
I have been reading 'Housing Constraints and Spatial Misallocation', by Moretti and Hsieh, AEJ Macro 2018, https://www.aeaweb.org/articles?id=10.1257/mac.20170388
In their equation (7), they derive a ...
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Process of deriving TVC(transversality conditon)
In Kruger's note, the process of deriving TVC is expressed as:
$0=lim_{t \rightarrow \infty} \beta^t U'(f(k_t)-k_{t+1})k_{t+1}=lim_{t \rightarrow \infty} \beta^{t-1} U'(f(k_{t-1})-k_{t})k_{t}
=lim_{t \...
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Predicting the Impact of War?
How would an economist go about predicting the impact of a potential war on a certain country's economy?
Say we are interested in assessing the impact of a possible war over Taiwan on the GDP of ...
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What happens to the LM curve when the interest rate is fixed?
Suppose the interest rate $i$ is fixed at $\bar{i}$. How does the LM curve look like in this case? I suspect that it looks like a vertical line on the $Y$ (x axis) v/s $i$ (y axis) graph. I think so ...
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Complete markets and convenience yields
I have been reading some papers on the safety/liquidity of US government debt and got a bit perplexed by the assumptions made in some of those papers. For example, this paper by Mehrotra and Sergeyev ...
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Money Creation Confusion
I've been studying money creation recently and have come across some contradictory statements and different types of theories that I'd like to clear up.
The classical theory of money creation which ...
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How to assess whether inflation is "well understood"
I was told (correctly) that the ability to forecast something is not the same as understanding it. I was also told that inflation is pretty well understood by macroeconomists nowadays.
How do ...
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Good inflation models
A well-received comment on this site stated:
Pundits might not understand inflation but macroeconomists actually understand inflation well nowadays
What models are currently used to forecast ...
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Is there good primer for distributional macroeconomics?
Distributional macroeconomics (for example; works of Ben Moll) seems to be more and more popular these days.
Is there any good primer for student that wants to try to get into this new field? I am ...
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How is inflation logically possible?
I am a total lay man on economics, but I find inflation to be an impossible phenomena. Here is my arguement for it,
We have that every year that more people are born (reduces labour price), and also ...
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Transitional dynamics in Solow model
I am trying to understand the transitional dynamics of the Solow model. Let's take the case of forward movement (or when the capital-labour ratio $k(t)$ increases).
I have a bunch of questions ...
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Using the Solow model in this scenario, why does the ratio of output per capita not increase?
I am confused about this question and the concepts that follow.
Countries $X$ and produces output per capita according to $y=Ak^a$. Country $X$’s savings rate is $s_X = 5\%$. Country $Z$ saves $s_Z = ...
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Was pre-industrial economy more likely to have overproduction or shortage problem. How large would be the gap
I read in somewhere that the per capita annual production of cast iron in the roman empire was on par with per capita annual consumption of cast iron in 15th century England. Assume this is accurate, ...
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Estimating Share Coefficients of Utility Function for a Calibrated CGE
Been reading The Textbook of Computable General Equilibrium (CGE) by Hosoe et al as a bit of side interest later in life.
Much of the book (and the CGE set-up generally) obviously follows naturally ...
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How do we calculate the chain weighted real GDP growth rate?
“ Year 1 price of good A:25
Year 1 price of good B:2
Year 1 price of good C:8
Year 2 price of good A:12
Year 2 price of good B:2
Year 2 price of good C:10
Year 3 price of good A:15
Year 3 price of ...
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Additivity of the Fisher price index for the same component
I have a dataset of yearly gross investment since 1970 in chained 2010-prices or "Fisher index prices". I want to depreciate each year's investment and add them up, however, reading about ...
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Why inflation doesn’t cool down economy by itself?
In the short run, wouldn’t you expect that an increase in (the rate of?) inflation leads to a decrease in GDP and thus inflation decreasing again. Like a self-correcting mechanism.
My motivation comes ...
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How can Real GDP increase while Money Supply remains fixed?
I'm studying the Money Market Graph with it's Money Demand and Money Supply curves. In the classical model they teach the Money Demand curve as sloping down to the right while the Money Supply curve ...
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Is money we make completely taken away by taxes?
In my opinion, any money we make will be completely taken away by taxes. Here is my logic.
When I earn some money (x), I have to give some as tax to the government. ...
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Parameters of ENV-GROWTH model for SSPs' GDP projection?
I'm searching to reproduce the ENV-GROWTH model used for the Shared Socioeconomic Pathways (SSPs).
The ENV-GROWTH model is a IAM used by OECD OECD website. It has been detailed in the Long-term ...
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How do I rebase this NDP per capita data?
So i got two different data sets that I want to put together, one is from 2004-05 to 2014-15 with the base year 2004-05 and the other one is 2011-12 to 2021-22 with base year 2011-12. I have also ...
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Are the available US National debt numbers gross or netted?
For instance, we know that Japan holds a large part of the foreign US debt, and at the same time, the US holds a foreign debt to Japan. My question is are the debt numbers of the US (for example, the ...
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If I were to talk about the unemployment rate of a county in a country, is it microeconomy or macroeconomy?
I have a project to do for school at macroeconomy and I want to know if it's correct to talk about the unemployment rate of a county(if this is micro or macro economy).
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How to compare the percentage change growth rate to the growth rate of GDP, both quarterly and for the year?
I am given a task to compare the percentage change growth rate to the growth rate of GDP, both quarterly and for the year.
I try to glance through the Gross Domestic Product, Fourth Quarter and Year ...
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Why is full employment desired in an economy if competition promotes innovation?
Why is full employment desired in an economy if competition promotes innovation?
In the simple Keynesian model, full employment equilibrium is a desired outcome, as everyone is employed.
However, if ...
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Alternative metrics to calculate inflation?
I am currently calculating inflation metrics for a retail store. I am simply using their POS data, to calculate the Year-Over-Year price change of each item.
I then weight this on the sales, sum it up,...
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Recently China increased the import quota on crude oil to 20% from last year. Why would they do that? What will be its impact on the economy?
Can someone explain why? Because I thought it had to something with increasing domestic market competition but I am very confused. Any help would be appreciated.
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Virtual trading on real commodity price
Today my friend told his idea. He said he would create "game" platform where people can buy & sell "virtual coin" that follows real world commodity price, but have no intrinsic ...
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Output growth in a Solowian economy
Consider a Solowian economy governed by the Cobb-Douglas production function. Further assume the owners of capital receive two-thirds of the national income and the labourers receive the remaining one-...
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Visualizing the "Impossible Trinity"
I would like to create a data viz to show, in one chart, where some of the major economies are on the trilemma. It won't be perfect, but I'm just looking for a rough characterization. For my data viz ...
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What happened to the Iranian Rial on August 1, 2014? [duplicate]
A student of my economics class showed me an astounding screenshot that, according to Google Finance, on August 1, 2014, the IRR made a very weird spike from 0.000040 USD = 1 IRR to 24 USD = 1 IRR. ...
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Optimal capital income tax
Imagine we have a representative consumer that maximizes
$$
\sum_{t=0}^{\infty}\beta^{t}u\left(c_{t},n_{t}\right)
$$
s.t.
$$
c_{t}+k_{t+1}=w_{t}n_{t}\left(1-\tau_{t}^{labour}\right)+r_{t}k_{t}\left(1-\...
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$P_tC_t$ or $C_t$ in budget constraint?
I am confused with basic concept, budget constraint.
I thought that the budget constraint should be look like $C_t + K_{t+1} = Y_t +(1-\delta)K_t$. It does not include the price variable $P_t$ in ...
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Mathematical Prerequisites for Recursive Macroeconomic Theory (Thomas J Sargent, Lars Ljungqvist)
I'm a math grad who is interested in learning more about economics for fun.
Reading through RMT, I saw some interesting math (in chapter 2) around using "invariant functions" to determine ...
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Discrete time Solow model golden rule saving rate
I have a discrete time Solow model and need to derive the golden rule for the economy by setting maximization problem. How can I do that, if I can’t take derivative?
Note: required investment can’t be ...
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How are GDP deflator series calculated
I'm slightly confused how statistical authorities construct GDP deflator series. In the UK, these are produced by the Office for National Statistics.
We have know that that we can derive the GDP ...
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Consumption smoothing via Euler equation
A representative cnsumer maximizes their lifetime utility function:
$$
U=\sum_{t=0}^{\infty}\beta^{t}\text{ln}\left(C_{t}\right)
$$
defined over consumption. They supply one unit of labour ...
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In the context of Blanchard and Watson (1982), what is the difference between the bubble component, bubbles and bubble?
Why are they consistently switching between plural and singular
and also, what is the difference between these and the bubble component?
A serious question. Below is the paper by Blanchard and Watson (...
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Production function with intermediate goods producer
I was reading the theoretical discussions of the following paper
Aghion, P., Boustan, L., Hoxby, C., & Vandenbussche, J. (2009). The causal impact of education on economic growth: evidence from US....
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Distinction between world reserve currency and world reserve asset
The two sound very similar, almost identical:
The dollar as a world reserve currency
The dollar as a world reserve asset
But I'd venture there are important distinctions. As an asset, the dollar is ...
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Difference between interest rate and rate of return (Keynes)
For Keynes the economy's interest rate is defined from the equality between money supply and demand. However, he also defines the rate of return on assets (which in equilibrium would all be equal). ...
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How can debt be larger than gdp? [closed]
government is taking debt because they spend it all at once and pay it over time so if you spend all at once there will be increase in gdp(multiple increase in gdp as money changes hands multiple ...
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Euler Equation and Policy Functions
I'm doing some self-studying using the publicly available preliminary exams from UC Davis and need help understanding a statement given in the solutions.
This particular problem is from the 2015 ...
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Applications of a certain type of stochastic processes in macroeconomic, macroeconometric or finance
A compound Poisson random vector $Y$ is well defined in this site in wikipidia.
Nothing prevents me from compound strictly stationary stochastic processes instead of compound random vectors. The ...
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How to derive (mathematically and intuitively) the relationship between expected price level and natural rate of employment?
We know that
$ W = \mathbb{E}(P)f(u, z) $
, so that nominal wage $ W / P = (\mathbb{E}(P) / P)f(u, z) $
From Blanchard.
Furthermore,
$ W / P = 1/(1+m) $ (where m is defined as the markup on wages to ...
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relationship between import prices and domestic cereal prices
I'm curious about the dynamics of imported prices compared to domestic prices of the same goods.
I saw something online that said
"Measure inflation: A primary reason for measuring import prices ...
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MMT and bond sales
Proponents of Modern Monetary Theory claim that bond sales are unnecessary and only help central banks set interest rates (which should be 0% anyway according to theory) and to provide safe interest-...
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How does the Cobbs-Douglas Demand system account for diminishing marginal utility?
So the cobbs douglas demand system indicates that the consumption of the capitalist class can be modeled as C=(1+r)K where r represents net profit for that time period, K represents capital stock of ...
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Can you explain the poisiton of gk and c? How can c be higher than the w? c=consumption/worker,gk=growth of capital stock,x =output/worker, v=profit
Why are gk and c located where they are on this production schedule graph? How can consumption per worker be higher than the wage rate?
Can you explain the position of c and gk in this production ...
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