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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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2 answers
1k views

Why does the Loanable Funds Market model use the real interest rate instead of the nominal interest rate?

As far as I understand, the majority of loan contracts specify a nominal interest rate, NOT a real interest rate. So a hypothetical loanable funds markets would have people suggesting potential ...
0 votes
0 answers
25 views

How can Unemployment rise when NFP rises

I'm new to macroeconomics and trying to understand recent macro news. On June 07 2024 two indicators released: Unemployment increased from 3.9% to 4.0% US Nonfarm Payrolls (NFP) rose by 272K in May, ...
2 votes
2 answers
536 views

What is equilibrium economics

I was taking a course I complexity economics. My professor told me economics that are taught in say Romer, Blanchard are equilibrium economics. My question is what does he exactly mean by equilibrium ...
1 vote
1 answer
54 views

Derivation of the Ideal Price Index

I'm studying Chapter 15 of Acemoglu's growth book, which is about skill-biased technological change. The unique final good is produced in perfect competition by combining the output of the two ...
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0 answers
25 views

What are the true normalized cointegration vectors in R (ca.jo, cajorls and VECM functions) and how to interpret them?

I'm struggling with understand the difference between (and why there is this difference) the normalized cointegration vectors provided by the ca.jo function and the ...
8 votes
1 answer
269 views
+150

Challenging question on mathematical economics

I'm going through the paper of Acemoglu and Autor (2011, Handbook of Labor Economics) Consider the following system of two equations: \begin{equation} \frac{A_M \alpha_M (I_H) M}{I_H - I_L} = \frac{...
1 vote
2 answers
46 views

Question about passage from Sanjay Rode's "Advanced Macroeconomics"

I'm looking to brush up on my formal knowledge of economic theory and in reading Sanjay Rode's "Advanced Macroeconomics" (ISBN 978-87-403-0156-4) I've come across the following passage (pp ...
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0 answers
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Aggregate Demand and Aggregate Supply

Suppose the economy is at full employment and aggregate demand falls. Show the effects on output and prices in the short-run. Also, show how the Keynesian aggregate supply adjusts over time to bring ...
1 vote
4 answers
66 views

Net effect of govt spending and tax cuts

Let's say a government comes out with a new budget. This budget decreases income taxes in a more or less neutral way (neither progressive or regressive). However they also decrease government spending ...
1 vote
1 answer
80 views

Understanding Minsky’s framework for rate transmission

Relevant except from Hyman Minsky: Although present value reversals occur-they certainly did in the 193Os and again to a much more limited extent in 1974-75 and 1981-82-the cyclical contractions and ...
2 votes
1 answer
50 views

A question about Lagrangian, KKT theorem, consumer's problem

Suppose we want to maximise a expected utility function: $$E_1(u(C_1,C_2,C_3)) $$ subject to following constraints. There are two possible situations each with probability $\frac{1}{2}$. $$C_1 + S_1 = ...
2 votes
1 answer
52 views

Properties of Multivariate Frechet Distributions

I was reading an answer from another Economics Stack Exchange post and I had further questions. The highest up-voted answer here utilized two properties of multivariate Frechet distributions, but the ...
0 votes
1 answer
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Calculating Real Budget Deficit, given Nominal Deficit and Inflation

I am doing this course on Coursera. In the context of explaining what Budget Deficits are, the professor puts up the following formula: Real Deficit = Nominal Deficit - (Inflation*Total Debt) My ...
1 vote
1 answer
49 views

Can global real GDP be calculated using nominal GDP and inflation rate? If so what is the error?

I am attempting to calculate (in R) the global real GDP using what I assume is the nominal GDP from the World Bank and what I can only identify as the inflation rate, also from the World bank. ...
2 votes
4 answers
114 views

How can good outcomes, and not just trade-offs, be achieved through economic policy?

I realise this is a very broad question, and my economic knowledge amounts to 1 year of high school, but it seems as though every economic policy causes trade-offs, and none actually solve issues. As ...
2 votes
1 answer
86 views

Who exactly suffered more in the US-China trade war?

The US and China signed a trade deal recently that made the news. Shortly afterwards, Nobel-prize winning economist Paul Krugman claimed that the US lost the trade war. His argument is that US ...
3 votes
3 answers
94 views

UBI - Raising the Poverty line

Imagine if a country starts to pay $1000/month to all citizens. Then my landlord knows that I can afford to pay a bit more rent from next month. So will my favorite ice-cream place, my barber and in ...
0 votes
1 answer
572 views

Questions about the equation: S=(Y-T-C)+(T-G)=I, in a situation of Equilibrium, in the market of loanable funds

Equilibrium in the market of loanable funds We have: S=(Y-T-C)+(T-G)=I So, (Y-T-C)=S? If that's true, then (T-G)=0, in equilibrium. So the government doesn't have savings, since all taxes are spent ...
0 votes
0 answers
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Inflation and deflation in foreign country as causes for inflation and devaluation in national economy [closed]

I read article about devaluation and there were two cases: 1.Inflation in foreign country can lead to inflation without devaluation in national economy. 2.Deflation in foreign country can lead to ...
0 votes
2 answers
89 views

Why limit the maximum size of deposit-CBDC transfers?

From page 33 of Dirk Niepelt's Money and Banking with Reserves and CBDC (October 2022): Some central banks consider caps on CBDC balances to limit the maximum size of deposit-CBDC transfers ("...
0 votes
1 answer
87 views

How to assess the quality of a forecast?

Let's say I have a time series model (VAR model for example). How can I know that my forecast is good ? I could use the R2 but is there something else? I also know I could just use in sample ...
0 votes
1 answer
126 views

What will be the additional investment?

I recently encountered upon this question: Suppose, in an economy,autonomous consumption is Rs 100 crore and autonomous investment is Rs 60 crore. Imagine that in this economy,with every increase in ...
0 votes
1 answer
177 views

Why can't Russian CB influence on dollar?

I read in Russian article that Russian CB can't influence on dollar. CB can't depreciate dollar. CB can influence on rate of RUB only. But if there is demand on USD or RUB then why can't CB influence ...
1 vote
0 answers
36 views

Flow budget constraint in a paper by Garleanu and Panageas

I am reading this paper and got confused by Equation (6) in said paper. Suppose there is an investor that can trade in riskless bonds that pay interest rate $r_t$, and holds a market portfolio with ...
0 votes
0 answers
41 views

What is liquidity of dollars?

I read Russian article about exported inflation and it was written there about liquidity of dollars: In order to reduce national debt of the USA and to stimulate economic growth government of USA ...
0 votes
0 answers
21 views

True Market Capitalization

Market capitalization just extrapolates a price from the current share price and number of outstanding shares. While this reflects a theoretical value for the companies/stock market in question, it ...
0 votes
1 answer
55 views

How an annual rate of 1.1 percent in the first quarter of 2023 is calculated on the website of bea.gov

The table 1 says Real gross domestic product (GDP) increased at an annual rate of 1.1 percent in the first quarter of 2023 (table 1), 1.1 percent is derived from Real GDP They are on the Right Hand ...
4 votes
3 answers
228 views

Real Income and a Fixed Money Supply

What would happen to nominal income and wages if the money supply were fixed (100% reserve banking). Would real wages increase, even though nominal wages would stay the same or even decrease?
3 votes
1 answer
115 views

How can the Fed enforce exit criteria if they begin yield curve control?

Over the past year, the notion yield curve control has resurfaced and appeared on FOMC minutes, decades after its last implementation. According to the Fed's introduction page: As the U.S. continued ...
0 votes
2 answers
319 views

Balanced budget and change in taxes

Consider a simple Keynesian economy in which the government expenditure ($G$) exactly equals its total tax revenue: $G = tY$ where $t$ is the tax rate and $Y$ is the national income. Suppose that the ...
1 vote
1 answer
174 views

Are there economic models that predict (only) a medium/long-term negative effect of protectionism?

Going by some ECB models/estimates from last year, protectionism would result in negative consequences pretty fast, e.g. For illustration, I will use the results of simulations carried out by ECB ...
0 votes
1 answer
59 views

What would happen if we had decreasing returns to scale in the solow-swan growth model? Would there still be a steady state and perfect competition?

I understand with IRS we have explosive growth and a single firm would eventually dominate the market since MC < AC, and hence P < AC, so firms would leave the market. I am struggling to find ...
1 vote
1 answer
124 views

Where can I retrieve a complete history of macro economic data annoucements?

I'd like to get the complete ( well at least the last 20 years) history of economic data announcement calendar firstly for US and secondly for G5 countries. I have found many websites that propose the ...
0 votes
0 answers
22 views

Derivation of Euler Equation in presence of the Dixit-Stiglitz Aggregator

I reading the working paper of Sebastian Banz (2012). I have an issue with the derivation of the Euler equation. The author models the demand side of the economy as follows The representative consumer ...
2 votes
1 answer
38 views

Understanding balance of payments

Suppose US records exports (increase) in the current account. What would the corresponding decrease in the capital/financial account have to be? Why does there have to be a corresponding decrease in ...
2 votes
1 answer
24 views

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 ...
1 vote
1 answer
27 views

Capital Inflows and Outflows in the Long Run

What happens to capital inflows and outflows in the long run?
1 vote
1 answer
47 views

Shouldn't the answers c & d be correct? [closed]

Credit used for investment purposes can lead to an increase in total spending and an increase in total output, with the possibility of the total output increasing either more or less than the total ...
1 vote
1 answer
71 views

Inflation adjustment: CPI less than one

I need help on how to adjust my figures by inflation. I have two pieces of data. The first one is a company's nominal expenditures during the 2015-2020 period: ...
1 vote
2 answers
2k views

rental cost of capital

I am estimating time series for rental price of capital using Hall-Jorgenson method: $$r=\frac{P_k}{P}(i-inf+\delta)$$ here, $r$ is the rental cost of capital, $P_k$ is the price of capital goods (...
1 vote
0 answers
50 views

Background courses for MSc in Finance

I'm a Mathematics bachelor student and next year I am going to pursue a 2-year MSc in Finance. In this question, as a total beginner in Finance and more generally in Economics, I'd like to get ...
1 vote
0 answers
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About part of Romer's model. Is my math process correct?

$$\mathcal{L}=\int_{i=0}^Ap(i)L(i)di-\lambda([\int_{i=0}^AL(i)^\phi di]^{\frac{1}{\phi}}-1)\\ s.t.\int_{i=0}^{A}L(i)^{\phi}di=1 $$ $$ \begin{aligned} \frac{d\mathcal{L}}{dL}&=\int_{i=0}^{A}p(i)di-\...
5 votes
1 answer
930 views

How to self-study graduate level macroeconomics? Is there even a point?

As I had hoped to learn enough macroeconomic theory to get some research ideas, my goal at the beginning of this summer was to read through and complete the problems in an introductory advanced ...
0 votes
0 answers
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Model specification - time series. Estimation of the effect of human capital on growth

Thank you for your help in advance ! I'm working on a research project at undergraduate level on the effect of human capital on growth in Nigeria from 1980 to 2018. My current model specification is : ...
0 votes
1 answer
273 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 ...
4 votes
1 answer
345 views

Social Planner vs Representative Household

Is there any difference between solving the social planner's problem or the representative household's in the Ramsey-Cass-Koopmans model? The social planner chooses a plan $\left\{c_t, l_t, k_{t+1}\...
1 vote
1 answer
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Proof of Blanchar Kahn conditions questions about jump variables

I am trying to understand BK model stability conditions (1980). Want to remind setup for these conditions. We have linear model with vector of predetermined ($X_t$) and jump variables ($P_t$). Main ...
2 votes
1 answer
173 views

LM curve from money demand

Let $M^d (Y,r)=a+bY-cr$ where $M^d = M/P$ is the money demand in the economy. $a,b,c>0$. Derive $LM$. My try $M/P=a + b Y - c r$ $b Y = -a + \frac{M}{P} + c r$ $Y = -\frac{a}{b} + \frac{M}{b P} + \...
5 votes
4 answers
2k views

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 ...
1 vote
1 answer
84 views

Proof of Blanchard Kahn conditions

I am trying to understand proof of BK conditions given in the appendix to their paper. In their paper authors have original model: There $X_{t + 1} \in \mathbb{R}^{n}, P_{t + 1} \in \mathbb{R}^{m}$ ...

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