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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Understanding Laffer curve with tax revenue
There are $N>0$ Households in an economy.
The government has aim to maximize a weighted average of income by imposing tax on the rich people and redistribute the tax revenue to the labor ones.
...
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Analyse the influence of interior demand and trade on exports
I would like to have a primer on how the current slowdown of the German economy affects its partners, for instance France, Spain and Italy. More specifically, if it goes mainly through Germany's ...
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1answer
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Macroeconomic Theory Consumption
Can we assume that consumption behavior features excess sensitivity when examined in macroeconomic data?
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Query regarding derivation of aggregate demand curve
What is the difference between AD curve derive from is-lm model and quantity theory of money.
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22 views
The relationship between profit and wages
It seems obvious that an individual company increases their profits when they reduce wages or increase automation or some such.
But if wages fell universally because of this, wouldn't that decrease ...
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1answer
17 views
Percentage/proportion of published papers with DSGE models
I remember reading a few years back an article that showed an interesting graphic with the percentage/proportion of published papers with DSGE models across time. I've tried searching, but I get so ...
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21 views
Profits and Aggregate Supply
I feel like this is quite a stupid question, but I can't wrap my head around it. Why do suppliers make less of a good as profits drop? Intuitively, shouldn't they make more of the good in order to ...
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Balanced Growth Path Calculation
Consider an extension of Alesina - Rodrik paper 'Distributive politics and
economic growth' (1994).
Instead of wealth taxation, impose a labor income taxation with a slight change in the model ...
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1answer
19 views
Why does the bond market induce efficient allocation of capital?
Going from this quote by Bryan Collins of Fidelity on China's economy:
One of the nice things we see from the development of a domestic bond
market is that it starts the process of pricing ...
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13 views
How do treasury bill auction work?
So i am having a couple of issues understanding the auctions of treasury bills.
I know that the treausury accepts the bids offering the highest price. The treausury accepts the competitive bids in ...
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open economy, and reduced world market price [on hold]
Can someone help ? :)
Suppose that a small, open economy that exports labor-intensive goods experiences a reduced world market price for its export goods.
Explain the effect this fall in prices ...
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Under what conditions should I use a Social Accounting Matrix Model vs. Multimarket Model vs Computable General Equilibrium Models?
What are the differences between the SAM, multimarket and CGE models. When should I use one over the others?
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Macroeconomics Modeling, [closed]
I would appreciate if someone could give some help on how to solve this problem.Any hint about part a?
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How can I model the impacts of improved agriculture technologies and food aid in a multimarket model?
Given a multimarket model for staple agricultural commodities wheat, rice, maize and sorghum, in a low-income economy, Im trying to figure out how I can use the multimarket framework to look at the ...
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Why is Marxist ideology victorious? [closed]
With the emergence of Negative rates, Capitalists can only profit by exploiting each other. How will Liberals survive? Will Liberals be annihlated?
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is there a correlation between credit defaul swap(CDS) and geopolitical risks?
because in my country,turkey..when we defend our legal security anxieties geographically,our cds values are increasing(500 currently,higher than argentina,greece,syria,iraq and aphganistan)but we are ...
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11 views
Under what condition does an economy realise steady state growth? [closed]
What are the factors that affect growth of an economy.email.ex-high/low/steam growth.
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24 views
Macroeconomics Modeling [closed]
I would appreciate if someone could give some help on how to solve this problem.
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Derive the Euler equation by using the substitution method to carry out the maximization (instead of the Lagrangian method)
Preference:
$$
W=u(c_1)+\beta u(c_2)
$$
while
$$
b_1=y_1-c_1
$$
and
$$
(1+r)b_1+y_2-c_2=0
$$
therefore,
$$
c_1=y_1-b_1
$$
$$
c_2=(1+r)b_1+y_2
$$
The new preference becomes,
$$
W=u(y_1-b_1)+\beta u((1+...
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What impact does deficit spending have on economic inequality?
Taxation schemes can be classified as progressive (the tax rate is higher for higher income brackets), regressive (the tax rate is lower for higher income brackets), or neutral (the tax rate is the ...
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What's the advantage of DSGE relative to BVARs?
DSGE models and BVARs are commonly used in academia and policy circles.
They generate different performances (e.g., in forecasting) and perhaps serve different purposes. Notwithstanding, they have a ...
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1answer
38 views
What are the benefits of UBI?
UBI - universal basic income (everyone gets a set amount per period)
If you've heard anything about me, it's that there's an Asian man
running for president that wants to give every American $...
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69 views
speculation and futures contract [closed]
What are speculations and futures contracts,I was a bank supervisor not a trader.I handled four lac fifty thousand checks worth many crores of Indian rupees during twenty eight years ,I worked in a ...
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1answer
22 views
Aggregate Demand
Today in class, we learned about aggregate demand. However, while I understand the shifters, I am an unable to understand what actual movement along the curve represents. Why doesn't a change in price ...
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38 views
Can we know what mainly caused the latest US manufacturing slump?
Reuters says (Oct 1, 2019):
U.S. manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, further heightening financial market fears of ...
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1answer
58 views
Does creating more jobs actually help the economy as a whole?
So I recently came across an interesting point on why NASA isn't a waste of money, and it basically stated how NASA supports thousands of jobs, creates community events, and uses a part of its budget ...
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30 views
What strategies can the president employ to deflate the dollar
United States president Donald Trump has publicly declared a desire to deflate the value of the dollar. I have read in news reports that he has asked aids to find ways to decrease the dollar's ...
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How do major global events interact with debt cycles?
I recently watched Ray Dalio's video on how the economy runs on short/long term debt cycles. However I was wondering how other major events impact economic growth:
How does the short and long term ...
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3answers
52 views
What happens to demand economics when rates are negative?
Keynesian economics assumes falling lending opportunity lowers profit.
Under negative rates less lending actually means More Profit. So how does this change things?
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1answer
108 views
Is there empirical evidence on usability of Cobb-Douglas production function?
This is my first question at Stack Exchange. I am trying to estimate simple Cobb-Douglas production function $Y=AL^{\alpha}K^{\beta}$
on US data and receive an unrealistic estimate of $\alpha$ and a ...
4
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1answer
97 views
Bretton Woods vs Gold Standard
I've been reading about the history of the IMF recently, and it strikes me as odd that despite the problems that arose with the gold standard (Germany in the 1920s, Fed cutting money supply during the ...
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0answers
42 views
Neoclassical Economic Growth Model Shadow Price for Discrete vs Continuous Time
I recently learned about the neoclassical growth model in both discrete and continuous time. The intuitive meaning of the shadow price for both cases is that it represents the value of one additional ...
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23 views
Economic Achilles' heels of global financial economy
The latest attacks on oil production in Saudi-Arabia highlights the need for risk managers to follow up on possible terrorist targets that can have a global impact on the global financial economy, ...
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2answers
56 views
Does free capital mobility invalidate the basic comparative advantage argument for free trade in goods?
In Herman Daly's article "Economics for a Full World", Daly states that international trade must be regulated because free capital mobility would invalidate the principle of comparative advantage (...
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What is the the return to scale of per capita production function?
If $Y=f(AL,K)$ is CRS, $a_k+a_L=1$ by the Euler Theorem.
However, I wanted to know the return to scale of $y=f(1,k)$ (i.e. $Y$ divided by $AL$).
I tried $z=p/AL$ ,
then $py=f(p,pk)$, differentiate w....
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3answers
67 views
Why is that when one person or group gets a good or service, someone else will have to live without it?
!
There's this statement in my Applied Economics book that I don't understand. Why is that when one person or group gets a good or service, someone else will have to live without it? I hope you ...
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1answer
24 views
What is it about the money market safeguards that increase volatility?
In recent coverage of the Fed's repo operation, I was struck by this line:
It also indicated Wall Street is struggling to absorb record sales of
Treasury debt to fund a swelling U.S. budget ...
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3answers
108 views
LM curve: How interest rate is changing without OMOs by the central bank?
The following is the gist from chapters - 3, 4 & 5 dealing with IS-LM model from Macroeconomics, Blanchard & Johnson, 6th edition.
Equilibrium in the financial market implies an increase in ...
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20 views
How does monetary policy affect inequality?
My thought process here would be that since government bonds are usually held by the richer households, buying of these government bonds would inject a large amount of money only to the richest, thus ...
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15 views
AS-AD Model, what would fall in production/output lead to?
Suppose there is some exogenous shock in the economy due to which the production of oil has fallen dramatically. Also, let's assume that oil forms a substantive part of the economy's production. What ...
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2answers
47 views
Standard Macro Model Intuition
In the standard model of Aggregate Demand and Aggregate Supply which display equilibrium in all the markets, I often get confused on how a change in one variable will shift curves. Say, output ...
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What is the most accessible work of Herman Daly?
I am an undergrad with limited experience in the fields of economics and ecology, and having recently discovered the work of the celebrated economist Herman Daly, who has been writing for decades ...
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Gali (2015) Chapter 8 Symmetric Steady State
In Chapter 8 (small open economy) of Gali's 2015 version of Monetary Policy, Inflation, and the Business Cycle, he often performs log linearisations around a symmetric steady state like below:
My ...
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10 views
Volatility measure in Diebold-Yilmaz connectedness approach
I am trying to create Diebold-Yilmaz connectedness table for returns and volatilities. When I do it for returns everything works properly (I can reproduce their work actually) but for volatilities I ...
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How to I find some of the most basic US State-level economics (survey) data for each year?
Some of the variables that I am interested are the state-level GDP, population, income, saving, consumer spending, employment, investment, industry share, RD investment, etc. I've tried the US census ...
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How did the purported 2008 decoupling of emerging markets pan out?
One opinion voiced (in The Economist) around the 2008 recession was that:
Decoupling does not mean that an American recession will have no impact on developing countries. That would be daft. The ...
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Historically has the “decoupling” of world trade from GDP not lead to (or deepened) a recession?
The ECB speaks (somewhat euphemistically, in my opinion) of a "decoupling" of world trade from "activity" (i.e. GDP) in Q1 2019:
Historically, has it been the case that such a "decoupling" can last, ...
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2answers
177 views
Why has M1 grown a lot faster than M3 after the financial crisis?
While the fed has printed a lot of money the last decade and the M1 money quantity growth rate has gone up significantly (red), the M3 growth rate (blue) is almost exactly the same as before the ...
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1answer
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If a firm produced 100 pens with a market value of $1 each, but only 50 were sold, what is the value added to the GDP? [duplicate]
Is it 100 dollars or 50 dollars? I'm assuming it is $100 because GDP is the total market value of all final products. Is this correct?
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55 views
A hypothetical question on neutrality of money
Let's assume that we start with an economy producing two goods, A and B, with each priced $100. Each good is weighted using the same quantity, so CPI equals 100. Nominal wage is also 100 dollars. An ...
