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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Export and import of defense industries' productions and relation of these productions to value of gold in context of India [closed]

Arms exports are determined by the usual price and non-price variables but they are different in their dependence on political variables.Governments dominate the market through support for their ...
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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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The economics of a “no deal” Brexit

A "no deal" Brexit is presented in negative terms. In such a scenario the UK would set tariff schedules in line with trade strategy and protect domestic industry/agriculture with tariff rate quotas. ...
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how can two countries have the same level of output per capita but different levels of factor accumulation and productivity? [on hold]

This is a question in my growth class on the PPT. Pretty confused by it. I tried drawing it out but have had no luck getting over this.
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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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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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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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Should Finland leave the eurozone?

Finland's economic recovery from the shock of the global financial crisis of 2007-8 has been very weak. The country has been in recession for the past three years, with GDP expected to expand by only ...
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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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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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Was the 2008 financial crisis caused more by the US subprime mortgage lending or more by an international energy and oil pricing crisis?

I recently read The Big Short by Michael Lewis in which the depiction of the role of subprime mortgage lending in the US and then run away speculation on CDOs are shown to be the central and primary ...
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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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51 views

Has there ever been a first world recession where inequality didn't fall? [on hold]

Gini index fell everywhere in great depression, great recession, the 80s recession, and so on. Has this ever not been the case? Have any countries not seen inequality fall in recession?
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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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Macroeconomics v Microeconomics

Microeconomics concepts greatly help us to understand the broad aggregates which are used in Macroeconomics to understand the overall functioning of an economy but are there any ways in which ...
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158 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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Are fair societies always unstable? [closed]

I was thinking about land ownership and whether this is a good or bad thing. What I usually do in these circumstances is try and reduce the question to it's simplest form. So I imagined an island ...
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What Level of Government Debt to GDP Ratio is Sustainable?

I was reading that Japan has a debt to gdp ratio of 240pc and I cannot understand why this has not left the country "bankrupt"? From looking at this like an ordinary person this level would be ...
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3answers
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Does investment directly influence demand?

I quote from the first page of India's Economic Survey 2019 (an official document) - Investment, especially private investment, is the “key driver” that drives demand, creates capacity, ...
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Is current inequality comparable to Communism?

This graph says the top income was 5% under Stalin. However- There were no real taxes in the USSR. The current vat and income tax take about half of income. A lot of that is capital gains, which is ...
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53 views

Confusion regarding debt to GDP ratio

While looking at debt to GDP ratio of various countries, I had difficulty with different figures on different websites. Look at this which shows China's debt to GDP ratio as 43.9%: http://www....
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The law of supply and demand - How does it work?

I've learned what the principle of supply and demand says, and would paraphrase it like this: The price of a good is at equilibrium when supply and demand are equal. Or with other words: The ...
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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?

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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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 ...
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Opportunity profits vs. opportunity costs

Having learned that Opportunity costs = the costs for avoided profits are a well established and quite useful economic concept, I wonder how its counterpart is officially called and investigated: ...
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Recapitalization of Banks

If a government decides to recapitalize banks then will that come under government expenditure and show up in GDP or will it be a transfer payment and stay outside the GDP? and why? In short, Is the ...
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Cost-push inflation and labour shortage

Is it possible for there to be a shortage of labour in an economy when there is cost-push inflation?
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What data/factors/attributes do the professionals monitor in a top-down analysis on the macroeconomics?

I am learning to do top-down analysis on a number of sectors in the US equity markets. I have never done it before and I would appreciate it if some professionals can share their experiences with me. ...
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How to show the production function is concave in K and L but not strictly so?

Suppose we have a production function with constant returns to scale. Let us denote it by $F(A,K,L)$ where $A$ is the technology, $K$ the capital and $L$ Labor. Further assume the first partial ...
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values of b1 change as sample values change? [closed]

i run the regression(with time series) which tests the effect of inflation rate on economic growth and i split the data into 2 parts, 1980-2000 and 2000-2018. From 1980 to 2000 inflation rate is high, ...
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What does it mean when we talk about “same basket” exactly for both GDP and CPI?

When we say about "the basket used for calculating the CPI is the same as the composition of GDP" What does it mean the "same basket"? Does it just mean the goods and service are the same but the ...
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Log differentiation of aggregate production function [closed]

Suppose we have an aggregate production function $Y = A F(K, L)$. I'm following some slides which then states that we if log differentiate we get the following: $\frac{\dot{Y}}{Y} = \frac{\dot{A}}{A} +...
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Why are bond yields so low when Fed is cutting rates?

Fed cut its rates for the first time in 10 years in July and it is about to cut the rates at least by 25 basis points during its September meeting. Usually, when Fed cuts the rates the bond yields ...
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Papers on International Trade and Environment

everyone. As a requirement to get my bachelor's in economics, I have to write a paper. The theme I picked is something along the lines of "the impact of environmental crimes and regulation on ...
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Why can't countries print another country's currency?

Counterfeiting money is clearly a difficult thing for individuals, but surely a country should have no problems counterfeiting another country's currency. Why don't countries do it? For example, for ...
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1answer
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Why do the income and substitution effects cancel for log preferences? Trouble reconciling Slutsky decomposition

I've read (pg 10) in Gourinchas' notes on consumption that the income and substitution effects cancel for log preferences, and I tried to prove this to myself doing the Slutsky decomposition for the ...
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How to use CPI to create Real Prices (Currency) on DAILY frequency data?

I'm working with a dataset and need to devalue nominal currency in dollars to adjust for inflation. The only indices I've been able to find however, have been monthly or quarterly. The range of data ...
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1answer
30 views

Can I Upload my Preprint on Arxiv Before Submitting it to JPE

I wrote a paper relating the optimal deterrence strategy for crime to concepts on statistical physics, and I am considering submitting the paper to the Journal of Political Economy. I'm wondering if ...
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Why is price dispersion from Inflation called relative price “distortion”?

I know what relative price is and that it fluctuates more frequently in times of Inflation. But what I don’t understand is why it is called “distortion” when relative price dispersion is caused by ...
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27 views

Overvaluation of a Currency

I am interested in knowing more about the valuation of a currency, and how the currency is determined to be 'overvalued' or indeed 'undervalued' in a floating/flexible exchange rate system. More ...
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1answer
23 views

The equilibrium effects of a change in government purchases on consumption

I can't get a homework problem started due to wording. I desire to understand it, so I will only put down enough to show my line of thought. we have a utility function to maximize, say $u(c,\ell)$, ...
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1answer
30 views

Define structural unemployment

I am a bit confused regarding the actual definition of structural unemployment. Some places say that it is the permanent decline of a particular industry, leading to workers being unemployed as they ...
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101 views

Could a “Japanese-style strike” work as it's supposed to? Under what conditions?

This is an urban legend, mostly believed in Spain and some countries in South America. The legend is based on the premise that their way to make a strike would be to work much more than usual in some ...
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766 views

Will an increase in interest rate cause short run aggregate supply to shift?

Most business borrow for financing their purchases of raw material and capital etc. Shouldn't a interest rate rise cause cost of production to increase, therefore shifting SRAS to left? Thanks in ...
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Why is the cash in circulation on the rise in rich countries?

The amount of cash in circulation is on the rise in rich countries (US, EU, etc; except the cashless economy, Sweden). In the digital era, isn't this phenomenon contradictional? For example, here's ...
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Does open source software contribute to GDP?

Does open source software contribute to the GDP of a nation? If yes then how, and how does it depend on the increase in usage? For instance, would an increase in the usage of open source software ...
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is it possible to find PPP monthly data?

For most of the databases, monthly PPP data is not provided. How it can be possible to find monthly PPP data? i mean PPP(exchange rate) conversion factors. Thanks