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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Modeling asymmetric effects

I was at a colloquium with the BOC and the presenter was showing some IRF's of rate change effects. Intuitively people tend to borrow more when rates decrease but can't exactly change their behavior ...
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How does a trade deficit affect GDP?

How would an increase in the trade deficit affect GDP? As per the majority of sources I’ve read such as Investopedia, they claim that GDP would decrease due to a decrease in the NX component of the ...
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Solow Model vs. Ramsey Model [closed]

I am a little confused. Our professor gave us the task of working out the similarities and differences between the Solow Model and Ramsey Model (both without technological progress) and which model ...
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What is the impact of falling inflation on the UK Economy ? URGENT [closed]

What is the impact of falling inflation on the UK Economy ? URGENT What is the impact of falling inflation on the UK Economy ? URGENT What is the impact of falling inflation on the UK Economy ? URGENT ...
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How is North Korea paying for all its imports?

As far back as the 1980s it seems that North Korea has imported more than it exported. Given that they weren’t exactly a wealthy country back then, and as most countries stopped debt financing ...
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Different ways of writing CIES/CARA utility

I frequently encounter the following two versions of writing CIES or CRRA preferences: $$u(c_t) = \frac{c_t^{1-\theta}-1}{1 - \theta}$$ ...and... $$u(c_t) = \frac{c_t^{1-\theta}}{1 - \theta}$$ The ...
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37 views

Doubt about timing and calculation of nominal GDP

I will consider an example to clarify my question. Assume GDP is calculated quarterly and with value added method in a economy with: Dec 2020 –> total value added = 11.5 Jan 2021 –> total value ...
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Are there any historical fixes to high interest on national debt

If I were to buy a bond of Argentina, like AL30, it is worth ~30 cents for every dollar, if I understand correctly, this means that, if the country required more money and issues more bonds the value ...
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Can a market capitalization of a derivative asset ever be worth more than the underlying instrument?

Is there an example (in history or present-day) of the total market capitalization of a derivative asset being worth more than the market capitalization of the underlying instrument? And would this ...
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PhD Micro and Macro Comprehensive Exams

I am interested in seeing some old examples of PhD comprehensive exams in both Micro and Macro. I have seen that previous posts (like this one) had some suggestions given, but some of the links (such ...
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40 views

If it weren't for the humans' affection of shiny metals, how would trading function like?

Say humans, for some reason didn't like gold or silver(altough it isn't as accepted as gold anyway) at all, in this case, how would the term currency would come to be? Would it function like how most ...
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Economic interpretation

I wanted to ask how do we give economic interpretation or meaning to expressions like the Phillips curve. So what is the economic interpretation of the Phillips curve π= Eπ + 1/α(y-ȳ) +v?
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Infinite labor elasticity with frisch elasticity

It is from Hansen(1985)'s paper. Suppose that household has utility function $u(c)+v(1-h)$ and they can choose probability to work($h$) as $\alpha$. There is an insurance $b_t$ giving $1$ unit of ...
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Recent Research Topics in Macroeconomics (Hopefully Growth Theory)

Im in my last year as undergraduate and i have the opportunity to make a tesis, i have strong foundations in econometrics and macroeconomics but I don't know what the latest research on macroeconomics ...
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Comparison between stochastic and deterministic growth models

According to the paper "On Stochastic Models of Economic Growth" by Assaf Razin and Joseph A. Yahav, stochastic models might be more suitable because a steady state never actually exists in ...
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Proof of Saddle-Path Stablility in Ramsey-Cass-Koopmans model

I'm currently struggling to proof the saddle-path stability in the Ramsey-Cass-Koopmans model. Based on the books Introduction to Modern Economic Growth by D. Acemoglu (chapter 7 and 8) and ...
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Why don’t sovereigns like Venezuela just immediately replace the currency in event of a hyperinflation

I am struggling to understand why governments, when faced with hyperinflation, often let it drag out for years rather than bite the bullet and replace the currency. Given that by that point the ...
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Expectation VS forecast

I'm confused at the difference between the 'expectation' and 'forecast'. In behavioral economics, forecast bias is defined as the difference between expectation and forecast. However both sound pretty ...
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1answer
41 views

Balanced growth path with investment-specific technology case

Resource constraint: $Y_t =C_t +I_t $ CRS Production function: $Y_t =K_t^{\alpha} (N_t X_t )^{1-\alpha}$ Investment function: $I_t =\frac{1}{q_t}(K_{t+1} -(1-\delta)K_t )$ The labor-augmenting ...
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Why did Greenspan think rate hikes would increase treasury term premiums?

Greenspan once called long-term treasury yield's continued downtrend despite his multiple rate hikes a "conundrum." The Fed has research on what is often called "Greenspan's Bond Yield ...
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45 views

How do central banks get the money for quantitative easing?

From the Wikipedia page on QE: Quantitative easing (QE) is a monetary policy whereby a central bank purchases predetermined amounts of government bonds or other financial assets (e.g., municipal ...
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2answers
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How useful is the Fisher equation of exchange?

What empirical value does the Fisher equation of exchange MP=PV have given that the velocity of money, V, is measured as PY/M i.e. nominal GDP divided some preferred monetary aggregate? Surely there ...
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1answer
38 views

Monetary sterilization’s working is wrong?

Say, there is an increase in demand for dollars (as compared to the other currency, say yen), which will put appreciation pressures on dollar. Then to counter this appreciation, we need to buy yen. ...
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What is capital?

In Microeconomics, it is simple; capital is the means of production. Simple production functions have mainly two inputs: labour an capital. Capital is mostly fixed in the short run, and labour is more ...
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Industries interconnections data sets

I'm looking for the data source that describes how the industries related to each other via consume/produce cycle. Any data source that could help me build chains like in the following example: ...
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What are some of the most successful redistribution policies used by governments?

I was wondering what are the different general types of redistribution policies and which ones have been most successful? In my economics classes, we learned how important redistribution is to reduce ...
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Most notable papers in Economics in 2021

This question is based on this one in Math Overflow I understand that I can't simply 'translate' the question into the area of economics. Thus, I'm open to improvements on the question framework. Here'...
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Understanding Debt Deflation

I read the following explanation for debt deflation in my textbook: To better understand how this decline in net worth occurs, consider what happens if a firm in 2018 has assets of 100 million (in ...
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1answer
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Why is return same as interest rate (yield) in the expectations theory?

My book (Financial Markets and Institutions, Mishkin et al.) treats returns and interest rates as the same thing while explaining the expectations theory in Chapter 5. However, in the previous chapter ...
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1answer
22 views

Why do we need to divide by the CPI of year of reference when calculating inflation rate?

I know that inflation rate = $$ CPI_{n} - CPI_{n-1} \over CPI_{n-1}$$ but I wonder what's the point of dividing by $CPI_{n-1}$, CPI is already a percentage so inflation rate should be $ CPI_{n} - ...
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42 views

Are there limitations an what the banks can do with the money they've received from QE?

I'm a math PhD student and have been trying to learn more about the commercial banking system. I've read that Quantitative Easing creates a "dollar prison" and is in fact deflationary but ...
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Comparison of Inflation rate of particular product with world inflation rate

To check the price reasonableness of the purchased product by Procurement manager, I aim to compare the monthly inflation rate of purchased product with world inflation rate of that product and ...
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23 views

Nominal vs Real value of a currency

I was wondering what is usually the relationship between the nominal value, NEER, and the real value of a currency REER? And how to interpret the REER of a currency, >100 overvalued < 100 ...
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Why is a stock market crash so bad?

Many folks speak about potential stock market crashes when central banks raise interest rates. I am not a graduate economist nor do I pretend to understand it, but I am definitely curious about what'...
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Reason behind unequal productivities of investment in different sectors, in the Feldman-Mahalanobis model?

In the model, production is divided into two sectors: the consumer goods sector and the capital goods sector. It is assumed that ratio of 'increment of income to the increment in investment in ...
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3answers
73 views

How do we know that inflation derives from supply chain issues and not from monetary expansion of Central Banks?

Everybody is talking about the fact that the current inflation derives from problems on supply chain distribution but Fed also printed tons of money. How can they affirm that inflation is from supply ...
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1answer
79 views

The impact of finance in the basic macroeconomic model

As I understand, in the very basic macroeconomic model we have that $Y = C+S = C+I$ where $Y$, $C$, $S$ and $I$ are real goods measured in monetary terms. Assume a steady state economy that produces $\...
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35 views

Showing Growth rates are equal in BGP?

One feature of Balanced Growth Path is that growth rates are equal along it: Consider the following conditions: $y_t= Xk_t$ $y_t = c_t + i_t$ $k_{t+1} = (1-\delta)k_t$ From first equation it is easy ...
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Forward Guidance affects interest rate?

Forward guidance affects the effective federal funds rate, right? as opposed to the overnight reverse repurchase/overnight loans, longer-term interest rates, or discount rate of loans from the Fed to ...
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Necessary conditions in overlapping generations model (OLG)

The consumer at each period maximizes \begin{equation} \displaystyle\sum_{i=1}^{I}\beta^{i-1}U(c^i_{t+i},l^i_{t+i}) , t=0,1,2,3,... \end{equation} subject to \begin{equation} (1+\eta_t)c^{i}_t+...
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26 views

Profit share determination in PKE

To my understanding, post-keynesian economics generally see price as a product of profits, wage expenses, interest payments, and inventory costs. To express it mathematically: \begin{gather*} p\ =\ \...
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General Definition of Steady State?

Would this general definition suffice for any steady state: In steady state allocations and prices are constant (or growing at constant rate) So for instance if I define an Arrow-Debreu equilibrium ...
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More equations than endogenous variables in RBC model

I recently came across my late father's bachelor's thesis, in which a RBC model is described. It appears to be a variant of Hansen's 1985 model with indivisible labor. I wrote the model into Dynare to ...
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When to use current US\$ vs. constant 2015 US\$ vs. PPP?

Given that I am interested in comparing various countries by their GDP per capita - which way of calculating this metric should I use? Namely, when to use current US\$, when to use constant 2015 (or ...
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time series of reserve requirement ratio of people's bank of china

I am looking for historical data on PBOC reserve requirement ratios with a breakdown by regulated subjects (large and small banks are subject to different ratios) as well as ratios for yuan and Fx ...
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Is there any situations where real exchange rate positively impacts on national imports?

I'm working on a gravity model analysing the factors that affect national imports, and the results showed that the real exchange rate (real exchange rate between local currency and foreign currency) ...
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1answer
78 views

Wealth in the utility function

Suppose there is a representative household of unit mass who lives forever. Preferences are given as: $$\sum\beta^tu(c_t,k_{t-1})$$ Technology is given as: $$k_{t+1}=AF(K_t,L_t)+(1-\delta)K_t-c_t$$ ...
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How to derive a general relationship between the Ramsey-Keynes rule and the law of motion for capital?

Consider a representative agent model where the representative agent has standard preferences $\int^{\infty}_te^{-\rho t}ln(c(t))dt$ where $\rho>0$ and $c(t)$ is consumption in period t as usual. ...
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53 views

Mortgage-Backed Securities

I was reading about MBS's and according to my understanding, suppose the bank gives me person a loan for house. Then, the bank sells the loan to the investor/government through an agency like Freddie ...
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Brexit impact data and forecasts

I am looking for some new studies (preferable from 2021) about the medium/long term impacts of Brexit, especially accounting for the TCA agreement. I know there are many papers about these topic, but ...

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