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 and draw phase diagrams: Ramsey-Cass Koopmans model
I am confused by how to construct phase diagrams. For instance, I have been given the following two equations from the Ramsey model:
\begin{align*}
\frac{\dot C}{C}=&\frac{1}{\gamma} (F_K(K) - \...
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1answer
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Effect of a depreciation on foreign interest rate?
According to the interest rate parity condition , if there is a depreciation of the domestic exchange rate, then the domestic interest rate will increase and the foreign interest rate will decrease. ...
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econometric stata outputt [closed]
please help me, what is the answer , how can I calculate predict value
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Elasticity of substitution, marginal rate of substitution and price ratio
so there is a problem I do not know how to tackle:
The is an utility maximisation problem and the solution to the Lagrangian leads to:$$\frac{C_1}{C_2}=(1+\rho)^\frac{1}{\sigma}(\frac{P_1}{P_2})^\...
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What are the effects of a 12 month sudden stop/shutdown of a capitalistic economy like the US? [closed]
Consider a scenario where consumer confidence remains low until a virus such as COVID-19 is contained. In this scenario, containment is defined as being achieved once a vaccine is manufactured and ...
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Advanced Macroeconomics complete solution needed [closed]
I need complete solution to this problem please. it's really urgent.
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Why do real energy prices increase in recession [closed]
I always thought it was odd that coal prices grew massively in the great depression
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1answer
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Net exports term in aggregate expenditure
This might be a basic question, which I don't yet understand. The aggregate expenditure (i.e., in my understanding, the total amount of inflation factored (i.e. real) money spent in the economy by its ...
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What are the necessary preconditions for a major economic collapse of western civilization due to the COVID-19 pandemic? [closed]
As evidenced by news and social media, the majority of the public seems to be operating on the belief that the COVID-19 is "going away soon". Why this notion is popular probably has a lot to do with ...
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Endogenous Growth in the case of externalities (Learning by doing)
so for the Learning by doing model productivity is defined as $$A_t=BK_t$$.
Inserting this into the optimum conditions leads us to the following:$$r_t=\alpha BL^{1-\alpha}$$ and $$w_t=(1-\alpha)B^{1-\...
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How does identical capital-output ratios imply identical rental prices of capital?
In the context of the Solow model, I need to show that if two countries have the same capital output ratio then they have the same rental prices of capital (they have same production functions). I ...
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Ramsey Model Market Clearing Condition
I have a problem understanding the market clearing condition for aggregated equilibrium in the Ramsey model.
Market clearing implies that all resources are used up, hence: $Y_t=C_t+I_t$ , where $Y_t$ ...
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Please help me see the holes in setting up an economy based on these rules:
The government can never give businesses currency.
The government re/distributes a set amount of currency per period of time to each citizen.
The only tax is a sales tax that must strive to ...
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1answer
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Universal basic loan
I'm looking for feedback and critiques of an idea. Universal basic income is an increasingly popular idea, but most agree that it would be terrifically expensive. Assuming that the goal of UBI is to ...
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1answer
104 views
How likely is a total economic collapse due to the potential coronavirus impact? [closed]
Most signs show that lockdown could easily stretch through the summer. A freeze in consumer spending would cause multiple industries to fail causing a ripple effect.
To be specific, if lockdown lasts ...
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2answers
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causal time series analysis economics
I want to analyse the relationship between the level of globalization,and the level of income inequality between two specific countries. however, I'm quite lost as to which method is good to use (in ...
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Which one of these sources best represents fiscal deficit data?
I'm currently recollecting data for an econometrics model I want to build later on with a panel data model.
However, sometimes it is difficult to find certain information.
For example, I want to ...
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1answer
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ECB: limits of quantitative easing and rates cut?
Context: In recent history (edit: i.e. post-WWII), the Covid19 crisis is unprecedented.
A significant portion of the world population is under lock down and almost all industries will be affected one ...
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If the payroll tax were eliminated on incomes below $30000 what would happen?
If you canceled all payroll taxes below $30000 / $60000 single / married what would happen? I know that this could increase firm profits, or increase wages, or the number of jobs, or decrease prices ...
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2answers
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“Consumption lowers investment” mankiw explanation
I am teaching myself macroeconomics and I am stuck on this reading Mankiw:
Because the economy’s output is fixed by the factors of production and
the level of government purchases is fixed by the ...
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2answers
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Is fiat currency better than a backed-currency?
My question is would it be better if we went back to something like a gold standard but backed by a finite virtual material instead? It avoids the problem of fluctuations in gold supply. The money-...
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1answer
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what is the impact of inflation on export of pakistan?
I wanted to know about the relationship of inflation and export if the country. How does it effect when inflation increase or decrease?
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1answer
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Creation of Money - Hypothetical Situation II
Continuation off this line of questioning. If I issue an IOU, it would need to be fungible, transferrable, etc in order to be considered "money." Understood - My follow up questions are:
Remaining ...
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How does stock market drop affect the economy if it doesn't affect the corporations?
Sorry if it's a basic question.
Suppose corporation ABC went through public offering many years ago. ABC retained 30% of the shares, and 70% are being traded. The very initial offering, ABC made ...
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1answer
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Gvernment deficits, by driving up interest rates, can contract the economy?
I don't grasp that boldened sentence. According to IS-LM model, rise in interest rate does cause decrease in Y.
IS-LMentary - The New York Times
What use is this framework? First of all, it helps ...
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What would happen in the IS-LM model if there is a simultaneous decrease in tax and interest rate?
Since there is a fiscal expansion with a decrease in tax i'm not sure what the interaction would be with a decrease in interest too, would money supply and output both increase?
Thanks
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Applying Econometrics to Monetary Economics
I've been given a problem in which I am told that GDP is a function of the supply of money, prices and demand,
$$Y = (M/P)^\delta$$
Taking logs, $$\log(Y) = \alpha + \beta \log(m - p) +u$$
...
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The derivation of Central bank's loss function? [closed]
How to derive the central bank's loss function?
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3answers
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Creation of Money - Hypothetical Situation
Imagine you sell me some consulting services. I don't have any cash, so I give you a $100 IOU instead. You now have a $100 Note Receivable on your Balance Sheet.
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2answers
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Should unemployment caused by the government closing non-essential businesses during quarantine be counted as structrural unemployment?
I have following definition of structural unemployment (taken from "Modern principles of economics" by Tyler Cowen and Alex Tabarrok):
Long-term unemployment caused by shocks or permanent features ...
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FDI, FPI relation with interest rates
I understand how a rise in interest rate might lead to an inflow of capital into debt securities, however wouldnt these Foreign Portfolio Investments (FPI) remove their funds from equity. And for ...
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Reason for the increase in aggregate demand due to the existence of black money
How can existence of black money amd black assets due to corruption, tax evasion etc., increase the aggregate demand? Can anyone explain this with an example?
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1answer
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Meaning of the sentence
I am having trouble understanding this economic concept:
Consumer can obtain maximum utility only if he/she incurs expenditure on various commodities in such a manner as to equalise marginal ...
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2answers
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Isn't recession is when there's an actual decrease and not just a less rapid growth?
I heard that for 2020, the global economic forecast is recession. The growth will be less than 2.5%. But isn't recession is when there's a decrease in GDP (for two consecutive quarters, as I recall), ...
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Shouldn't the total global debt amount to zero and not $253 trillion?
In Jan 2020, the Institute of International Finance (IIF) came out with a report (read summary here) that the total global debt is expected to climb to a new all-time high of more than $257 trillion ...
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What are the exact sources of CARES Act economic transfers?
The bill Coronavirus Aid, Relief, and Economic Security Act provides "2 trillion". (There is also H.R.6201 - Families First Coronavirus Response Act providing aid.)
From which sources will the ...
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1answer
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Why is investment included in GDP?
Why is real investment included in GDP? I thought GDP is only supposed to measure final goods produced? I thought capital is an intermediate good but I guess I am wrong. An intermediate good is sold ...
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Federal Reserve Leveraging of COVID-19 Fund
Reading an article in The New York Times about the COVID-19 stimulus bill, I stumbled on this detail
the Fed can take a limited amount of funds and deploy them widely: The central bank only needs ...
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1answer
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How do deal with negative values when finding log difference?
I’m trying to run a regression with GDP quarterly growth as the dependent variable. I’ve been asked to find the log diff of the data values however I’m unsure on how to do this on excel and how to ...
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1answer
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what would be an efficient investment when central banks have massive qe?
Recently the central bank said in a statement on its website. “Aggressive efforts must be taken across the public and private sectors to limit the losses to jobs and incomes and to promote a swift ...
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Question About Consumer Price Index (CPI)
So my question is regarding how a change in consumer buying behavior affects the CPI. Say for example, that in times of crisis people tend to buy their goods from shops with cheaper prices than the ...
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Elasticity of substitution in leisure
This might be a very basic question, but I am a beginner in macro models. I would appreciate help with my doubt.
In different papers I have read about the elasticity of labor supply or the inverse of ...
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1answer
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FDI - Foreign Direct Investment
If in the sector foreign direct investments (FDI) are not stable, for instance, increasing dramatically in one year, decreasing next year. fluctuation continues over ten years, what FDI can say about ...
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1answer
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Prove that a preference is linear
Given the following two conditions:
$x\succ y$ implies $x+a\succsim y+a$,
And,
$x\prec y$ implies $x+a\precsim y+a$
We want to prove that $\succsim$ is a linear preference.
One of the ...
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Are typical macro DSGE (RBC or New Keynesian DSGE) models linear, non-linear, or log (linearized)?
In Carl Hommes 2015 book on Expectations, it seems he considers DSGE models (being it either RBC DSGE or New Keynesian DSGE) to be linear, or (log)linearized models, on page 3 of the introduction. He ...
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Why would the price of goods rise up after increased consumption due to the outbreak?
On the wake of the COVID-19 outbreak, consumption of some goods will increase.
But, my question is why so?
My understanding is that, since aggregate demand for these goods has increased, supply can'...
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1answer
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What are main reasons a typical DSGE model is called non-linear? Why are these non-linearities important?
What are main reasons a typical DSGE model is called non-linear? Why are these non-linearities important? Is a non-linear model inherently less stable than a linear model? Why?
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Real wages fluctuation as per classical economics
I have just started studying Macroeconomics and have noticed that as per the Classical economics, the real wage level will always remain same because any change in price level in the market is ...
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1answer
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Beginner wanting to learn about economics/finance to explore career options?
I want to explore the banking/financial industries more for potential career options, can you recommend any books/ free online courses and sources in general as a starting point to build on my ...
