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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15 views

Can't we measure the growth in the income levels of poor?

Inflation has been a challenging aspect of policymaking. In such situations growth in the income levels of the population living below the poverty level can never be measured accurately (due to ...
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What would happen if fractional banking was phased out?

There are negative interest rates now and into the foreseeable future. This must mean there is too much money being offered compared to the demand for loans. Fractional banking acts as a multiplier on ...
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Effect of a drop in interest rates in Indonesia on the US-China trade war

I was wondering if the drop in Interest Rates will impact the war in any way. Need this for an assessment. Any help would be appreciated.
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Derive the growth rate of an equation

I have the following equation: $$\mu =\left [s_{\pi }-v(s_{\pi }-s_{W})+\zeta \right ]$$ And I have to derive its growth rate, which is: $$\dot \mu =-\frac{v}{\mu } (s_{\pi }-s_{W})\dot v$$ Do ...
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Hep with total differentiation of an AD function

Is there anyone who can help me with a total differentiation exercize. I am starting with the following formula for AD: $$x=\mu ^{-1}(g+i+e)$$ Where $\mu$ is the Keynesian multiplier. And have to ...
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Why is price dispersion from Inflation called relative price “distortion”?

I know what relative price is and that it fluctuates more frequently in times of Inflation. But what I don’t understand is why it is called “distortion” when relative price dispersion is caused by ...
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1answer
15 views

How does interest rate impact exchange rate?

When I’m using the forward exchange rate formula based on non-arbitrage theory, it tells me that a positive interest rate spread (i_domestic > i_foreign)would cause the forward exchange rate(units of ...
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The range of inflation dwindles means?

Basically, inflation has been a challenging aspect of policymaking in India because of its level (i.e., range in which it dwindles) and stability (how stable it has been). Here dwindles means what?
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What are the factors on which value of all resources ( good, silver, cash land etc. ) found in world changes over time?

And followed by, Does it right to say that, if any country become rich then other must become poor and vice-versa. If no, then Is it possible that, in certain conditions, all Nation in the world can ...
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Regarding Macroeconomic Models

I've recently started my PhD and upon looking at my textbook (the sargent one) I found that it differed greatly from my Masters textbook (Romer) and in turn my undergraduate macro text (williamson). ...
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Causes of trade deficit: Multiple views

I am trying to understand the causes and macroeconomic implications of running a trade deficit in the United States, and I came across a few different views on this topic. I'd like to know if there ...
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1answer
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Is it bad for the economy of a country if forreign firms buy companies?

If a forreign firm buys a company. For example a Russian firm buys a British company. Is this good or bad or neutral for the British economy? As I see it, the profits of the company will be going ...
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Differences between GVA and NVA?

I have studied these 1) Gross value added= value of output- intermediate consumption. 2) Net value added= gross value added- depreciation. But how could we say "Net value added = Gross value of output ...
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Why a Current Account deficit implies a Financial Account surplus

Every macro textbook out there states that if a country has a Current Account deficit, it must have a surplus in the Financial account, but I have not heard a convincing explanation. Imagine a ...
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25 views

Which assets beat the injection of money and why?

Suppose a world in which every year $1.03 ^ Y$ liquidity is injected. Which assets could perform better than 3% per year? Growth forecasts for these?
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If China stopped exporting in USD, what would happen to the economy? [on hold]

If China stopped exporting in USD, what would happen to the economy? What would be the effects in US economy, China economy and Latin America economy?
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what are the advantages of using Canonical Cointegrating regressions?

What are the advantages of using Canonical Cointegrating Regressions in comparison with OLS regressions? Thanks.
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Consumer's side and producer's side

GDP gives the picture from the consumers’ side, while GVA gives the picture from the producers’ side. By definitions of both GDP and GVA "the amount of goods and services PRODUCED in an economy in a ...
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1answer
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About gross domestic product at factor cost

GDP at factor cost= Net value added + Depreciation. Here my question is why depreciation added to Net value added? I am confused here: Net value added = Gross value added - depreciation; so the above ...
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what is the difference between normal OLS simple linear regression and Canonical cointegrating regression?

what is the main difference between simple linear regression and Canonical cointegrating regression. Why we should use Canonical cointegrating regression instead of OLS?
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33 views

Why is the cash in circulation on the rise in rich countries?

The amount of cash in circulation is on the rise in rich countries (US, EU, etc; except the cashless economy, Sweden). In the digital era, isn't this phenomenon contradictional? For example, here's ...
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Is a high borrowing rate bad?

I'm not an economist, so this may be a stupid question, but why are high borrowing rates among individuals and corporations bad? Like, I've heard high student and credit card debt mentioned as reasons ...
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What is the difference between conditional and unconditional risk premia?

This is an asset pricing question. What is the difference between conditional and unconditional risk premia? Here's the context: The fact that carry trade strategies typically earn positive average ...
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can we compare data of only specific years in economics?

Can we compare inflation rate of only 2018, 2013 and 2008? will it be justified because it is only focusing on specific years not overall trend
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Difference in import

I have a budget of 600\$ to buy a new phone, local shops have the same phone I want for for 600\$, but I found the exact same phone for 500\$ in China. So I bought phone from China and made the ...
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Solow Model with a Capital Stock Externality

Suppose we have the following form of the Solow Model: $$ Y_t=K_t^{a+b} L_t^{1-a} $$ where a,b >0, and a+b<1. Is it possible to determine the steady state growth rate of k (k=K/L), and the steady ...
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Useful models/theory private debt and borrowed constrained households

In macro oriented research papers the role of private debt is discussed and that apparently when there is a lot of private debt in the economy, households tend to be borrowed constrained.. Could ...
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CPI and real quantities

How is it real wages = old wages * new cpi / old cpi? It seems this discounts back to the reference period and then multiplies out to current day. This would give us new (nominal) wages?
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Why does equity have historically poor performance after rate cuts?

I am struggling to understand why equity markets seem to suffer shortly after fed rate cuts. Here is a rather telling chart: Question Assuming not some kind of spurious relationship, what's the ...
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17 views

List of countries moved to developed economies in the last 50 years

I read in Bloomberg that five countries moved to advanced economies in the last 50 years from developing economies and one of them was Singapore. Wondering what are the other four countries? The ...
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Equilibrium level of national income calculation

I am trying to calculate the Y,if the following info is given: Autonomous consumption=200 MPC=0.8 Tac rate=0.1 G=100 I=200 Exports=250 imports=150 What is my equlibruim level of national income(Y).
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Log-linearizing a non-separable utility function around the steady state

I've started reading Jordi Galí's Monetary Policy, Inflation and the Business Cycle (2nd ed., 2015). In section 2.5.2, Galí considers an example with the following non-separable period utility ...
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why data for PPP conversion rates are given annually?

i try to find quarterly ppp rates for currencies to compare actual exchange rates from PPP levels, but all of data is annual? why?
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Finding optimal lot size

I have small problem in calculating the optimal lot size. Suppose i have fixed price of $250,000$ for my warehouse. The price of each product is $5,00$ dollars and order costs are $500$ dollars but ...
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2answers
73 views

Log linearising (Gali textbook)

In Gali (2015)'s textbook Monetary Policy, Inflation, and the Business Cycle, variables in levels are denoted with capital letters, logged variables with lowercase letters. However, when a log-...
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What are some similarities and differences between the 2001 recession and the 2007 recession in terms of causes and the effects on the economy?

I know the two were caused by the burst bubbles and worsened by rising interest rates. I also know that the the 2001 recession had a long jobless recovery but did not experience as many bank failures ...
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Economic course shedule [on hold]

I want ask about courses in economics. Should I take a Money and Banking course before taking Macroeconomic Theory or is it better in the opposite order? And what about Industrial Economics and ...
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How does investment lead to generation of jobs?

I quote from India's Economic Survey 2019 (an official document) - While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific ...
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1answer
33 views

Does investment directly influence demand?

I quote from the first page of India's Economic Survey 2019 (an official document) - Investment, especially private investment, is the “key driver” that drives demand, creates capacity, ...
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1answer
80 views

Why is macroeconomics studied through “Shocks”?

"Why is modern macroeconomics all about identifying this shock and that shock?" Coming from a theoretical econometrics background, I have recently delved into empirical macro literature. I am a bit ...
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How the Balassa-Samuelson affect real exchange rate?

According to standard Balassa-Samuelson effect, when the productivity increases in the tradable sector (GDP), price increase can be observed in non-tradable sector and this can lead to appreciation of ...
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1answer
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CES v. Leontief Aggregator in Production

Consider a production process with two distinct capital types such that there is a capital aggregator. You could view $k_v$ as a more versatile capital (e.g. can be converted into many different ...
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When Balassa-Samuelson effect increases, real exchange rate depreciate?

I researched several literatures related with Balassa-Samuelson effect and according to literatures, as Balassa samuelson effect increases, real exchange rate appreciates. However according to the ...
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If PPP Exchange rate is 0.291, what does that mean?

I've normalised deflators for countries A and B. If the Price level of Country A/ Price level of country B = .291, does that mean that on average for every dollar a person in Country B spends, for the ...
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How to calculate PPP Exchange Rate using GDP deflator?

I'm doing a project and I'm asked to find Purchasing Power Parity exchange rate. The way the teacher says to do it is to divide my countries GDP deflator by the US GDP deflator over a time series. Is ...
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1answer
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Having a lower inflation rate is not the same as having lower overall prices?

Having a lower inflation rate is not the same as having lower overall prices.Why? lower CPI(inflation) means price levels in country decreases?
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Does High rReal GDP per capita lead to overall high prices

Switzerland has higher Real GDP per capita level than USA an Britain but when I looked at data, Switzerland inflation rate is lower than those countries. Why?
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If I find the GDP deflator (i.e., price level) for a given time series, can I then find real consumption given nominal consumption?

I've found the gdp deflator for a country over a 25 year span. If I have nominal consumption for the same time series, then I just have to divide nominal consumption by the p-level I found with the ...
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Does High GDP per capita lead to overall high prices

Switzerland has higher GDP per capita level than USA an Britain but when I looked at data, Switzerland inflation rate is lower than those countries. Why?
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Does anyone know how to find disposable income data? [duplicate]

I'm doing a macro project and I need to find disposable income data over a 25 year period. My professor said that this metric data is available directly on the World Bank website. I've searched ...