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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Is there Modern Translation Book for Wealth of Nations?
Is there a New/Modern English Translation of Adam Smith "Wealth of Nations"? I cannot locate any online, it is a great read, just trying to understand it better.
The old/classical style of ...
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Did Capitalism Adam Smith Support a Central Bank and Fiat Money?
Does Adam Smith and Capitalism support a Central Bank/Federal Reserve?
I am trying to read through the book "Wealth of Nations" to understand.
Having a central bank/regulatory figure ...
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Why in neoclassical growth model K* is always to the left of K gold?
In the phase diagram of the Ramsey model, the steady-state capital per capita is always to the left of the golden rule capital per capita. What does this mean? Why does this always happen?
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Where does the money go when Musk, Branson, and Bezos spend money on a private space program? [closed]
Where does the money go when Musk, Branson, and Bezos spend money on a private space program?
What countries and demographic groups have been affected positively? What countries and demographic groups ...
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What is an 'economic reason'? in relation to marriage?
I'm taking a economic course over the break and with no prior experience with economics, I'm struggling with coming up ideas for a prompt in relations to why people marry.
I thought the idea of ...
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Is there any macroeconomic model based on Olson's collective action theory?
I've recently learned about Olson's Collective Action Theory and I'm interested in mathematic models of economies that follow the theory's axioms. I tried finding a general equilibrium macro model ...
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Proxy for financial crisis
I'm trying to do some empirical work and trying to find a good proxy for the financial shock of 2008. My first idea was to consider the change in real interest rate between 2007 and 2008 but I don't ...
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When the LM schedule is vertical, a change in fiscal policy (government spending) only increases the interest rate. What’s the intuition behind this?
As the government spending increases, the aggregate expenditure increases. This results in the increase in income.
Now in the money market as the income increases, transaction demand for money ...
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Overheating in Short Term Equilibrium
My text Economics by Hall, Lieberman, gives a model of $\text{AE}$ (aggregate expenditure) in the short term as a function of $\text{GDP}$, $\text{MPC}$ (marginal propensity to consume), and ...
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Help with derivation
I am trying to understand how the authors jumped from these two equations:
$k^d=k^s$
$k^d=ln[\bar{l}\alpha^{\frac{1}{1-\alpha}}]-\frac{1}{1-\alpha}\tilde{R}$
$k^s=ln[\bar{l}(1-\tau)(1-\alpha)\alpha^{\...
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Where we call GDP aggregate demand or aggregate supply in VAR models is our choice?
In the attached picture below, shocks associated with GDP are demand shocks and shocks associated with inflation are supply shocks.
Here, shocks associated with GDP are rather supply shocks, and ...
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What causes inflation?
Given the recent increases in the price of many things in the US (lumber, used cars, gasoline, etc…) I have begun thinking about what is going on at a macroeconomic level. My first thought is “it’s ...
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Do Non-Productive Investments Need to Be Written Down in GDP Accounting?
In this article, Professor Michael Pettis talks about how GDP can be overstated if non-productive assets are not written down.
However, I've seen in a few places (in the comment section of the link ...
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Differentiation in a inflation tax calculation
everyone. I am studying Advanced Macroeconomics, by Derek Leslie, and I am having some troubles in understanding the result of a differentiation in the Chapter 1, section 5. This section approaches ...
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Relationship between productivity and GDP
I was looking at the OECD data for GDP per hour worked as a stand in for productivity and was extremely confused when I started comparing the numbers and tried to understand the relationship between ...
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National income value added method
I have a doubt in national income value added method I will tell you by example see I produced 5 kg wheat so national income is amount of wheat and I gave 3 kg wheat to my teacher as fees assuming no ...
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In VAR models, do variations in the variables come solely from shocks?
In DSGE models, if you shut all shocks to zero, then the variables have zero variations. Thus, they just equal their steady-state values for all periods. So the series for all variables are just flat ...
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Which software can be used to estimate a non-recursive SVAR?
Which software can be used to estimate a non-recursive SVAR? Not sure though if this question belongs here but I found nothing so far on google. Or researchers using them do it manually?
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New Keynesian Phillips Curve: log-linearization
I am facing some problems in log-linearizing the following equation:
which is the New Keynesian Phillips Curve (NKPC).
The expected result, once log-linearized, is:
which is described by equation 46 ...
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In a deflationary recession, lower demand leads to lower prices. Does this contradict the law of demand?
In Principles of Macroeconomics (a free ebook available on openstax), the chapter on inflation says, regarding deflationary recessions:
High levels of unemployment typically accompany recessions, and ...
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Difference between retail sales growth and consumption growth
In the comments in this article, professor Michael Pettis states that "By the way please do not assume that retail sales growth rates are a good proxy for consumption growth rates."
I ...
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If a poorer country's currency appreciates equal to the dollar would their minimum wage decrease?
Currently $1 = 31.5 Thai baht, and Thailand has a minimum wage of 336 Thai baht/day (42 baht/hr).
If the baht appreciates to the point where it is $1 = 1 baht would that 42 baht/hr minimum wage ...
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Why do firms reduce both price and supply during a recession?
Could anyone explain why firms reduce both price and supply of goods and services during a recession with a practical real life example for better understanding ?
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Market for loanable funds
Can anyone explain why in some textbooks a government deficit causes a shift to the left of the supply curve (Mankiw) and in others a shift to the right of the demand curve (Krugman).
Furthermore,how ...
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What are some negative/positive aspects from globalization in regard to developed countries?
I have read many articles on how globalization is helping developing countries, as more and more companies from developed countries have been moving their production oversees. However, as hard as I ...
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Kaldor's Theory of Income Distribution
I am referring to Kaldor/Keynesian theory of income distribution and I am having trouble understanding why the model won't work if marginal propensity to save of workers (S(w)) is more than the ...
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About the 9 tests on Index number theory to evaluate the efficency of the different types of price indexes
Correct me if I'm wrong, I've seen a section in Wikipedia about Index number theory and I've understand it as "if an index x (Laspeyres, Paasche, etc.) satisfies all of this test, then it's 100% ...
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King–Plosser–Rebelo Preferences and Additively Separable
The wiki of King–Plosser–Rebelo preferences says that the utility function has the multiplicatively separable form $$u(C, L)=\frac{1}{1-\sigma_{c}} C^{1-\sigma_{c}} v(L)$$ and "in the limit case ...
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what is 'mid-year estimate' in following chart?
If it is mid-year population then, why it is so less in comparison to 'total population'
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Representative Agent and Maximization
If there's a maximization of utility subject to a budget constraint-would it be always a representative agent model? Can it be heterogenous in some cases?
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India's exports and the rupee
There are several analyst asserting that a strong rupee would dampen India's exports,
for example below article. Given that circa 80% of indian exports are invoiced in USD, why a strong local currency ...
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Derive and Decompose The Aggregate Elasticity of Substitution in CES Economy
The paper is Oberfield & Raval 2021.
Consumers have standard Dixit-Stiglitz preferences consuming the bundle
$$Y= \left(\sum_{i \in I} D_{i}^{\frac{1}{\varepsilon}} Y_{i}^{\frac{\varepsilon-1}{\...
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Are there any notable exceptions to the Impossible Trinity theory?
I am referring to the theory presented on Wikipedia and The Economist that states:
The impossible trinity (also known as the trilemma) is a concept in international economics which states that it is ...
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Is there any consensus on investment spending?
I know there is never a total consensus among economist but do economist on average want to see investment spending increase? I speaking from the perspective of someone in the US.
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Will interest rates rise if a government runs a huge budget deficit?
My (very simple) logic is this:
if government decides to spends a huge amount of money it does not have (meaning that it does not come from taxes) then it will borrow that money and thus create a lot ...
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1answer
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Is there an economic argument against mass immigration?
(I know little about economics, so I'd appreciate an elementary explanation)
Background for this question is that I was wondering what makes people say China's economy will keep growing while its ...
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How is GDP growth interpreted? For example, what does 6% q/q saar mean?
For GDP growth or other economic data, I noticed that it's usually quoted in q/q (quarter over quarter), m/m (month over month), and y/y (year over year). I've also seen q/q saar. Using GDP as an ...
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Small Open Economy (SOE) Vs. Emerging Market Economy (EME)
In the graduate-level macro, I often see a Small Open Economy (SOE) setting, e.g., in the textbook of Gali. Yet when I read papers, authors sometimes use the term Emerging Market Economy (EME).
I ...
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Optimal residential location and multivariate Frechet distribution
I was reading the paper "Housing Constraints and Spatial Misallocation"
by Chang-Tai Hsieh and Enrico Moretti.
First they define the utility function
$$ \ \ V_{ji}=\varepsilon_{ji}\frac{W_{i}...
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1answer
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What is the implication of perfectly reversible capital?
I am reading the lecture note in labor economics by Acemoglu and Autor. In the chapter of basic search model, they assume capital is perfectly reversible, and argue that "Perfect reversibility ...
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What does it mean “non-Walrasian” or “quasi-Walrasian”?
In a recent NBER workshop, Robert Hall started a discussion with his first slide summarizing the macro literature.
I am not very familiar with either DMP model or New Keynesian model and have no idea ...
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Multivariate implicit differentiation (Samuelson, 1948)
I am studying "The Simple Mathematics of Income Determination", by Paul Samuelson (from book is called "Macroeconomia (artigos selecionados)", by APEC-CAEN. It is the 1st chapter ...
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Can anyone explain why the Swiss balance of payments is not balanced (real data)?
While doing a little research I went to the Swiss National Bank's website and downloaded their data on the Swiss balance of payments.
The data is here:
https://data.snb.ch/en/topics/aube#!/cube/...
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Economic Surveys for Japan other than the Quarterly Tankan?
I am doing a project that requires economic survey data. I have already finished for Europe (which has the European Commission survey that is released monthly) and for the US (ISM Reports, National ...
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1answer
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Does it make sense to talk about Bitcoin 'inflation' when little to no goods and services are listed in Bitcoin currency?
I think of inflation as a generalized increase in the price levels of a basket of goods and services.
I should add that my understanding presumes that inflation should be measured in the same currency ...
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What is meant by the sentence in the context of “Monetary Policy in India”? [closed]
To quote from the book, "Indian Economy by Nitin Singhania," this is what I found out,"It is a macroeconomic policy used by RBI to influence the supply of money." What is meant by ...
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Why does a higher risk aversion leads to a lower intertemporal elasticity of substitution?
Mathematically, a higher risk aversion leads to a lower intertemporal elasticity of substitution (there is an inverse relationship). But why?
If I become more risk-averse, I would like to smooth my ...
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1answer
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A differentiation step in a economic growth model
I started studying Olivier Blanchard and Stanley Fischer's Lectures on Macroeconomics, but I couldn't follow the reasoning behind a differentiation step (at least I think it is something involving ...
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Are these two different cases when it comes to Forex Reserves?
In a forex reserve, what is the difference between "Buying US Dollars to pile up reserves" and "Using FPIs, remittances or exports to build up reserves" ?
How differently do they ...
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Derive the Demographic Structure in the Steady State
I am reading a paper with following description on the demographics in their model: "... each (representative) agent lives for $T$ periods ... We assume that each individual has $e^{f}$ children ...
