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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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A question about savings and investments

Hey all I am new to macroeconomics and I'm studying right now. I see in my notes that savings $=$ investments, $S=I$. I've searched a lot online to see why this is true and I've found a lot of answer ...
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a question on the endogenous growth model

I have such a question on the endogenous growth mode”: In the macroeconomics literature there are various ways in which the growth process in the Ransey-Cass- Koopmans model has been endogenized. ...
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Research at the county-level: Macro or Micro?

Is research at the county-level considered applied micro or applied micro? The standard undergrad definitions ("micro" = "individual", "macro" = "nation") are of no help with units of measurement ...
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Use Lag Operator to find Lifetime Budget Constraint

The budget constraint is $c_t + \tau_t + s_{t+1} =w_t(1-l_t) +(1+r_t)s_t$ And assume $\underset{t \longrightarrow \infty}{lim} \ \displaystyle{\frac{s_t}{\Pi_{i=1}^{t-1} (1+r_i)}} = 0$ Lag ...
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Where to find bilateral data on FDI before 2001?

Where can I find bilateral data on FDI between countries over time (30 years)? On World Investment Report (WB) I could have this data for only years 2001-2012. And from CDIS (IMF) I found years 2008-...
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25 views

Where can I find data on bilateral trade?

Where can I find data on bilateral trade between countries in the world over time? I heard that only International Trade Center has access to this data, but I guess there's a public source. I tried ...
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34 views

Where can I find data on market capitalization?

I am working on Home Equity/Bond Bias and need data to calculate the indicators of Home Equity Bias. So where can I find data on market capitalization (stocks and bonds) by year for each country? ...
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What are the linearised equations for the flexible economy in Smets and Wouters (2007)?

To solve the Smets and Wouters (2007) model, we need the linearised equation for the economy when wages and prices are flexible (monetary policy rule depends on the potential output). However, in ...
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How to deal with potential output in the Sims (2002) framework?

In Sims(2002), the author explains how one solves a linear rational expectations model. $$\Gamma_0S_t=\Gamma_1S_{t-1}+C+\Psi z_t + \Pi \mu_t$$ The only thing exogenously defined in the $z_t$ ...
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Equilibrium income in Simple Keynesian Model

I could not understand how to analyse the effect of the given situation in this question on government's expenditure and income. If the budget is balanced, the use of calculus technique also didn't ...
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Book recommendations : Which book provides intuitive ideas and mathematics behind IS LM model?

I've read mankiw and dornbusch but I still feel there's something missing. Haven't been able to develop the economic intuition behind various shapes of is and lm curves. I would appreciate more in-...
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Question about IM/LS model and aggregate demand/supply

IS curve assumes aggregate demand equals production. Together with LM curve, for a particular price and other exogenous variables, we have one set of production and interest rate that balances both ...
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Why don't we transact with securities rather than fiat money?

I don't know a whole lot about economics besides for an intro course I took once so bear with me please... I'm a software developer working with cryptocurrencies, and I got to thinking that it would ...
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1answer
57 views

Capital accumulation

I have following dynamic optimization problem $$V(k_0)=\max \sum_{t=0}^{\infty} b^t((1-a)ln c_t+a ln(l_t))$$ Subject to $l_t+e_t=h$ and $y=Ak_t^pe_t^{1-p}$ and $k_{t+1}=i_t+(1-x)k_t$ ...
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Market Value Changing in Response to News

On May 24th the DJIA dropped and the news has been attributing it to Donald Trump's cancelation of a talk with North Korea (see image below). My understanding is that the companies making up the DJIA ...
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Is there a typo in Sims(2002) paper on solving linear expectations model?

Here's the Sims(2002) paper. It's equal to the published version. The author gives the following example: And tries to write it in the matrix notation of (1) in the paper. However, his solution - ...
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How does one asses the impact of a proposed policy?

My State government is considering a new regulatory policy at the moment. We need to put together an assessment of the (likely) economic impacts of the policy. How do we do that? I don't work for ...
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What are the contents of “Recursive Macroeconomic Theory”

I am trying to self-study macroeconomics. I just read parts of "Advanced Macroeconomics" by Romer, and found it a good, intuitive introduction to more advanced models (I have also read a more basic ...
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Sustainable growth in the long run [closed]

Suppose that, in addition to physical capital and labour, an economy requires a fixed factor and a non-renewable resource to produce the final good. Prove that an economy with these input requirements ...
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1answer
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Why don't governments mandate a wage decrease in recessions?

I have an amateur interest in economics so forgive me if I display my ignorance. From my understanding, both in the Keynesian and monetarist theory of recessions, the recession occurs because ...
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Real money balances

What is the intuitive understanding behind real money balances? It is frequently used in Mankiw's book on Macroeconomics, but I'm struggling to understand how it fits in with the Aggregate demand ...
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Expectation augmented Phillips Curve

Currently studying Intro to Macroeconomics, and faced Expectations augmented PC. In my textbook it is not clear how expected inflation affects unemployment. My view so far, is that expected inflation ...
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Market clearing condition with Walras law

I have a diamond overlapping model The question is as follows Let us consider an infinitely lived production economy populated at time t by $N_t$ identical and perfectly competitive adult ...
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A unique global currency and a balanced macroeconomic system

During my last trip, I traveled in Bolivia for two months, and I was struck seeing how life was cheap there, from a European point of view. I believe that is the same in the great majority of the "...
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An error in *The Taming of Chance*?

Ian Hacking's The Taming of Chance is interesting if a bit heavy reading for my usual taste (I'm about 2 weeks and 24 pages through it). It's about the slow decay of determinism and rise of ...
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1answer
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Macroeconomics: effect of technology/workforce in the short run

My friends and I have homework and we can't come to a consensus on these questions on how they affect aggregate demand, aggregate supply, and equilibrium: Foreign investors building machineries with ...
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Are Federal Reserve Banks accurately forecasting GDP?

Following on a prior question Objective evidence of USA economic "boom", I took a look at the GDP forecasts for 2018 Q2 provided by the Federal Reserve Bank of Atlanta and NY. As of May 9 the Atlanta ...
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What is the best example social norm effect economy?

Here is my example. I read the paper called "Social norms and Energy Conservation" (2010) by Hunt Allcott, about the energy conservation of households by providing them with the amount of energy ...
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Do changes in fixed taxes have a bigger effect on real GDP compared with government spending because they affect consumption

True or False: Changes in fixed taxes have a bigger effect on real GDP compared with government spending because they affect consumption
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28 views

How does a stock market work under a command economy

If a central government owns the means of production and controls business, what ramifications does that have on a stock market? Under such an economy are shares still traded as they are in a mixed/...
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14 views

Required bank reserves in Brazil

Currently studying about the tools of monetary policy and one of them is changing the required reserves ratio of banks in order to reduce loanable funds or increase them. Although the reserve ratios ...
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1answer
22 views

Import/export by sector/country data source

I am looking for import/exports data by sector and country, with partner countries. The goal is to get a picture of overall imports/exports to/from a specific country with (possibly) all of its ...
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Could the inflation following the Gold Rush have been avoided, are we any “wiser” on inflation now?

Quoting Milton Friedman on the inflationary period shortly following the American Gold Rush in California: "Because there was more gold, they had to pay a little more gold to buy goods and ...
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Solow model steady state question

I am confused about the difference between steady-state level of output per worker and steady-state level of income per capita. What is the difference between the two? I know that income per capita ...
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Assumptions made in Solow model

In my macroeconmics textbook, it says that one of the assumption made for the solow model is that all countries have the same partial production function of F(K0,L). Why is this? Also why is partial ...
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Accelerator and Multiplier effects at full employment

I have a question regarding the multiplier and accelerator effects. The way I see it, the value of the multiplier tends to be lower as the economy approaches full capacity. I would therefore expect ...
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definition of gross external financing needs

is anyone able to clarify the meaning of 'gross external financing needs'? it appears defined in some places as the sum of things like current account deficit + short term external debt + external ...
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Is quantitative easing part of the ECB's and Fed's mandates?

Is quantitative easing part of the ECB's and Fed's mandates or is it an exceptional policy that they used, especially in the financial crisis 2007-2008?
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1answer
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Have countries ever tested economical measures at city level?

Countries all the time takes measures at national level, and several times they create disasters. For example, they believe adding or removing a new tax will be positive for the overall economy, and ...
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Production function question

Some help with this would be appreciated.
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Social conflicts in economic growth models

I'm highly interested in theories and models which explain how do social conflicts influence economic growth. What papers on the topic can you recommend? I was searching for some seminal and most ...
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2answers
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What is the effect of expansionary fiscal policy in case liquidity trap situation?

I've read that liquidity trap means interest rate is at its minimum and increase in real money stock will not lead to fall in interest rate because people will be demanding whatever the amount is ...
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What will be the effect on velocity of money when demand for real money increases?

Suppose that a change in government regulations allows banks to start paying interest on checking accounts. The money stock is the sum of currency and demand deposits, including checking accounts. (...
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Dornbush model - relationship between i and S

In the Dornbush model, when we separate short and long run equilibrium. This is what I apparently have understood: SR1: an increase in Money Supply ($M_s$) leads to a fall in domestic interest rates (...
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22 views

Devaluation of exchange rate meaning

Pilbeam's textbook on International Finance (p. 106) says: (...) the immediate effect of a devaluation of exchange rate from $S_1$ to $S_2$ is to make domestic good competitive (...) How can be ...
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Concept of return on investment but for the state instead a firm

So, following a discussion I had today, I have the following question. If we use the return on investment (ROI) to describe the gain of an investment is there a similar concept not for a company but ...
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Debt Securities datasources inconsistence

From BIS Debt Securities Statistics I found out the International Debt Securities for all countries. I'm collecting data for the US, so I merely took the relevant lines of data for the US. From IMF ...
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Mechanics of Sterilized Intervention?

I'm looking to see if someone can help improve my understanding of sterilized intervention in FX markets. My intuition/understanding is: Assume that the domestic currency is depreciating, perhaps ...
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Is there any stock issued in foreign currencies?

We have international bond issued in different currencies (domestic and foreign). Do we have the same fact for stocks? for example, my company in Switzerland may issue some stocks in CHF, can I issue ...
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Present Value Analysis

For my exmaple, we have machine A with an initial cost of 15K and O&M of 2k per year for the next 4 years. After 4 years, the O&M rise to $2.7k per year. No salvage value and life span of 20 ...