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 to derive Fisher's equation?

Guys help me derive Fisher's equation or suggest references that have the derivation. I am looking for this relation: (1+i)=(1+r)(1+π)
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Capital Inflows and Outflows in the Long Run

What happens to capital inflows and outflows in the long run?
Anonymous's user avatar
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What's the best measure of liquidity or money inside the market?

What's the best measure of liquidity or money inside the market? Often times, the Federal Reserve prints money or buy stocks or give emergency loans, and all these actions cause money to increase in ...
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Capital income growth equals labor income growth along the balanced growth path

I am trying to show that when technological and population growths are (non-negative) constants, the rate of growth of capital income and labor income in the steady state will be equal. Assume that ...
uninterestedacademic's user avatar
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Parameter in calibration are not sufficient for pruposed Model. Where is the lacking data coming from?

The paper „social security reforms, capital accumulation and welfare: A notional defined contribution system vs a modified payg system“ by Lin, li Presents a model for analyzing the impact of ...
Felix Neuwirth's user avatar
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Definition of wage in the Solow Model with Technological Progress

Consider the Solow model with technological progress. Suppose the production function is given by $F(K(t),A(t)L(t))$. The variables used are standard. Questions: Assuming the output price is ...
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How can I find whatever publicly available data sources exist for U.S. macroeconomic nowcasting at frequencies higher than quarterly?

I am pretty familiar with the usual U.S. Federal macroeconomic data sets, the NIPAs, the Fed's Flow of Funds accounts, and my favorite, the integrated macroeconomic accounts. Most of these come out at ...
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Blanchard Khan Conditions and State Variables in Three Equation NK Model

Suppose we have a three equation NK model based on logarithmic household preferences specified by $$\begin{align*}y_t &= \mathbb{E}[y_{t+1}]-(i_t-\mathbb{E}[\pi_{t+1}]-r_t^n) \\ \pi_t &= \...
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Checking whether Ricardian equivalence holds

If I need to check whether Ricardian equivalence holds in a given economy, I only need to look at whether the equality $G + \frac{G}{1 + r} = Nt + \frac{Nt}{1 + r}$ holds, right? (I'm using $G$ to ...
Riccardo Iorio's user avatar
5 votes
3 answers
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Why is it a problem if China is exporting "too many clean-energy goods"?

(Not sure if this should be on the Politics SE, but I'm looking for an Economics-based answer, since the political answer seems obvious enough.) Source In China over the past few days, [US Treasury ...
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Ramsey model and the steady state

Following Barro's book about the Ramsey Model, when we work with variables expressed in units per effective labor we end up with the following system of 2 differential equations \begin{equation} \frac{...
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How could i find excess demand and excess supply using an formula

How do i find excess demand and excess supply using a formulae question
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Balanced Growth (Solow Model)

Sometime ago, I asked for the definition of steady state in the Solow Model. I came to the conclusion after reading the answer that the steady state is the sequence $\{(K(t), L(t), Y(t), C(t), w(t), r(...
uninterestedacademic's user avatar
4 votes
1 answer
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LSE EC417 2023: Markup as Elasticity Tends to Unity

I'm going over a macro past paper and am stuck deriving and interpreting a result. The question begins with the CES aggregator for aggregate output $Y$, based on a continuum of intermediate goods $(...
Joseph Basford's user avatar
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Balance of Payment vs. FX rate

How can a country with a Current Account deficit can have an exchange rate appreciating and viceversa a Current Account surplus and a currency depreciating?
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GDP concept - intermediate goods

In the following 2 cases, what are the impacts on GDP of year N and year N+1? What about the impacts on expenditure side, income side and product side? A baker buys 10 dollars of wheat flour on 31/12/...
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Demand aggregation with CES

I am reading the following paper by Angeletos and Lian and got stuck on equation (3). The problem is the standard optimal consumption bundle choice. Namely, aggregate consumption of "farmer" ...
Wittgenstein's Poker's user avatar
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Solow Model: Steady state when there's population and technology growth

How is the steady state of a Solow Model defined when there's population growth and technological growth? The usual definition is to have $\dot{k} = 0$ (or $k_{t+1} = k_t$ in case of discrete time) ...
steadystate's user avatar
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Consequences of running a panel VAR with 2 variables stationary at levels and one variable stationary at first difference

I have a trivariate Panel VAR system with the following variables: LnGDP (Natural log of GDP) Fiscal Expenditure (as % of GDP) Interest rate ( in %) LnGDP and interest rate are stationary at levels ...
shantanudravid's user avatar
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1 answer
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How To Publish a Quantitative Economics Paper Without a Degree or Affiliations

I dropped out of a physics degree and do not have a degree. After this, I somehow found myself going from writing marketing software related code to writing quantitative trading code and doing ...
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Import proportionality assumption in input-output tables

I'm struggling to get the meaning of the assumption underlying the construction of the input-output tables, that is, the proportionality assumption. I read: When materials offshoring is measured by ...
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some question on Buera and Nicolini (2004)

I am struggling with understanding one result in Buera and Nicolini (2004) published in JME. In page 538, they write $$A_t(h^t) b_{t-1}(h^{t-1}) = Z_t(h^{t-1})$$ where $A_t(h^t)$ is a $N \times J$ ...
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Sustained growth in Ramsey model

It is known that in the classical Solow model that if we use CES production function instead of Cobb Douglas function, it is possible to have sustained growth if the substitutability is larger than 1. ...
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Is the Accursed Share hypothesis respected among academics or practitioners?

Batallie, a French philosopher of all things, put forward a famous (at the time) theory known as The Accursed Share. A few lines from the treatise, characterizing his position: I will simply state, ...
Arash Howaida's user avatar
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Labor augmenting technological progess and its relevance

Can you provide a proof showing why balanced growth requires technological change to be labor-augmenting in the neoclassical growth model?
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Production function in Solow Model

I was studying about the Solow Model from Acemoglu. One of the properties of the production function $Y = F(A,K,L)$ is that it exhibits diminishing marginal products. That is, $F_{KK} < 0$ and $F_{...
guest's user avatar
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1 answer
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what portion of US consumer spending that is debt-financed (looking for data source)

In a piece from Business Insider, we read: US households today have a savings rate of just 3.7% — way below the historical levels of 9%. Meanwhile, consumer spending exploded by \$208 billion in the ...
discipulus's user avatar
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0 answers
138 views

Global Asymptotic Stability in the Solow Model - Rigorous proof

Consider the (simplified) Solow equation, which is a first-order non-linear difference equation: \begin{equation} k_{t+1} = sf(k_t) + (1-\delta)k_t \end{equation} where $s$ and $\delta$ are two ...
Maximilian's user avatar
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A question about a derivation process in gali (2015), chapter 2, equation 20

In chapter 2 of Gali's book, he uses the equation (25): and combine the "driving processes for technology and preference parameters", inflation can be written as : I wonder how this new ...
sei sou's user avatar
1 vote
1 answer
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What exactly is an exogenous stationary distribution?

All jobs are identical except for their wages, and wages are given by an exogenous stationary distribution of $F (w )$ with finite (bounded) support $\mathbb W$. This is from page 6 of https://ocw....
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Definition of economics

What is the accepted definition of economics? I've read basically two versions, one that defines it as the study of scarcity and the other as the study of how to coordinate human desires given ...
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Why was the September 2022 United Kingdom mini-budget so badly received, but not other similar budgets?

I'm not sure if this is an economics question or a political one. I'm posting it here because I'm looking for an economics-based answer. In September 2022, UK Prime Minister Liz Truss produced a ...
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IS Curve and AD Relation

Relation between Aggregate demand and Investment saving What happens to the Investment saving curve when Aggregate demand curve is steeply sloped? I know that with a higher Marginal propensity to ...
Shantanu Dravid's user avatar
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What are the root causes of inflation, other than cost-pull/push inflation? [duplicate]

What I have found so far: Apparently, increases in regulatory costs lead to reduced competition an therefore to inflation. However, in normal economic circumstances, as long as competition exists, ...
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2 votes
2 answers
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Proving the Global stability in the Solow Swan Model

Consider a simplified version of the Solow-Swan model in discrete time, where technology is normalized to one and the population size is constant. The Solow equation is given by \begin{equation} ...
Maximilian's user avatar
2 votes
1 answer
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What is the frisch elasticity and its meaning?

I understand that Frisch elasticity is the "elasticity of hours worked to the wage rate". I wonder why then we use this specific naming only for this? Is this to make it clear what this ...
student1's user avatar
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2 answers
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Should younger people earn more then older ones?

I think in all societies it is usually the case that when you start a job you are usually paid less than a person in the same position who is about to retire. I'm not an economist by any means, but I ...
stish's user avatar
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1 answer
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Why are sticky wages an explanation for an upward sloping SRAS curve?

I often see that the theory of sticky wages is cited as an explanation for an upward sloping short run aggregate supply curve. I understand that if aggregate demand shifts to the left, there will be ...
toomanyfeet's user avatar
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1 answer
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Present Value of Profits Earned From the Discovery of New Ideas in the Romer Model

Page 127-128 of Romer's Advanced Macroeconomics states that Equation (3.39) tells us that the profits at t are $\left[\frac{(1-\phi)}{\phi}\right]\left[\frac{(\bar{L}-L_{A})w(t)}{A(t)}\right]$. These ...
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Question on productivity cycles

What is “productivity cycles”? Is this different from business cycles? And suggest papers on the productivity cycles as both theoretical and empirical studies? I will be happy if you inform me ...
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Varian Analysis Non satiation question

Consider preferences defined over the nonnegative orthant by (xl,x2)> (yl,y2) if X1 + X2 < y1+ y2. Do these preferences exhibit local nonsatiation? If these are the only two consumption goods ...
Chavi Dusad's user avatar
2 votes
1 answer
115 views

Can GDP ever be negative?

Imagine that in an economy we only produced a toy and that cost us 10 dollars. We don’t sell this toy in year 1. Then this goes under Investment as +10 and GDP is +10. But say the only thing we do in ...
Darby Bond's user avatar
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1 answer
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Have governments ever defaulted on its public domestic debt or treasury bonds?

Recently, some countries have experienced hyperinflation such as Lebanon, Zimbabwe, and Venezuela. Has there ever been a time when a government defaulted on its treasure bond payments due to a country'...
Jude Zambarakji's user avatar
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How to Compute the ln of the GDP with only the growth rates

I have an exercise where I was only given the growth rates of an economy for every year, starting in 1985 and ending in 2023. Using only this data, I was asked to compute the ln of the GDP for 1984. ...
Econ_Student_98765's user avatar
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Logic behind uncovered interest rate parity?

So I am having trouble understanding the UIP equilibrium condition. Namely, according to UIP, when the home country has a higher interest rate than the foreign country, its currency will depreciate ...
Nixy 124's user avatar
1 vote
1 answer
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Why does price stickiness induce non-determinate interest rates in the NK model?

I am hoping for a simple intuition for why price stickiness induces indeterminacy of the interest rate, $i_t$, in the benchmark New Keynesian model. When prices are flexible, the natural rate is ...
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How did Malta catch up?

How did Malta catch up with the likes of the United Kingdom and France (PPP constant 2017 international $) ?
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How do I show that in an incomplete market general equilibrium, βR<1?

Consider the stochastic incomplete market environment, assume endowments are iid and agents face a borrowing constraint where assets have to ge greater than $-\Phi$. Assume that $u$ is strictly ...
Ludwig Gershwin's user avatar
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What is the mainstream economic response/interpretation of double burden, or the problem with unwaged reproductive labor?

I have recently done some readings into unwaged reproductive labor (the labor done in the household, primarily by women, which facilitates the household), and the arguments provided support the idea ...
22333444455555556668888's user avatar
3 votes
1 answer
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Marginal and Average Cost in the Romer Model of Endogenous Growth

On page 124 of David Romer's Advanced Macroeconomics (5th Ed), he mentioned that for the Romer model, Because firms producing final output face constant costs for each input and the production ...
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