Questions tagged [macroeconomics]

Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

Filter by
Sorted by
Tagged with
0
votes
0answers
3 views

Current Account and FX valuation

I was reading somewhere that under normal circumstances the FX rate of current account surplus countries tends to underperform and that of current account deficit countries to outperform. Can you ...
0
votes
0answers
5 views

Adjusting for inflation (is it possible that real $ exceed nominal terms)

I have adjusted the following data to inflation, and I am confused as my real figures are higher than my nominal terms, but I always assumed that adjusted for inflation figures would be lower (i.e. ...
0
votes
2answers
197 views

Balance of Trade ( Surplus and Deficit)

I'm new to economics. I want to ask that what remedies that the government can actually employ to address the deficit/surplus in the fish trade balances over time? My attempt, Trade deficit (i) The ...
4
votes
1answer
100 views

Negative Inflation, AS/AD framework, What Graph to use?

My macroeconomic homework contains the question below, and I'm not sure what graphs we're suppose to use to solve it. I believe I can answer the whole question using the IS-MP Diagram, but do I need ...
3
votes
0answers
28 views

How to set up the Hamiltonian for this utility maximization problem?

Consider a representative household who accumulates capitals, earns labour and capital incomes, consumes part of its incomes, buys bonds and pays taxes. The household maximizes its lifetime utility $$ ...
2
votes
1answer
32 views

Godley-Lavoie private bank model

Good evening everyone ! I'm currently reading Godley and Lavoie Monetary economics. It's really an awesome book, and I'm at the 7th chapter where they introduce private bank money. The model is very ...
0
votes
0answers
32 views

Recursive competitive equilibrium with uncertainty

Consumer's preference: $E_0 =\sum_{t=0}^{\infty}\beta^t u(c_t)$ Markov transition matrix for labor: $\Gamma=\begin{pmatrix}\gamma_{ll}&\gamma_{lh}\\ \gamma_{hl}&\gamma_{hh} \end{pmatrix}$ In ...
6
votes
1answer
210 views

Are there any general rules that can be used to assess the consequences of a significant minimum wage increase in a country's economy?

Quite recently the EU Parliament discussed upon a new draft EU law that will ensure a minimum level of wage protection in all member states. The minimum relative to average wages of full-time workers ...
0
votes
1answer
27 views

Should governments print money while the currency gets stronger

In a given situation where a local currency becomes very strong compared to other major currencies (like the USD, EUR, etc...), should the government / central bank leverage the opportunity to print ...
4
votes
2answers
148 views

What is the intuition behind Expected Utility Theorem?

I am referring to the definition in Proposition 6.B.3 on Page 176 of Mas Colell. I follow the formal proof and the application of the Independence axiom at various steps (mathematical application of ...
5
votes
2answers
364 views

Stock-Flow Consistent models

Stock-Flow Consistent (SFC) models are becoming more popular among heterodox economists (particularly in the Post-Keynesian school of thought). But I fail to see the relevance of this approach. The ...
1
vote
1answer
42 views

What causes rate transmission to be slow?

A recent quote from David Rosenburg on rate hike expectations reads: Remember, everything the Fed does in a moment of time has a peak impact on the economy 12 to 18 months later. Thus, raising rates ...
0
votes
2answers
47 views

Help with a (simple) log-linearisation

As a solution to an economic model, I end up with the following equation: $$L=\frac{\alpha f^{\epsilon}s\left [ 1-Ak(1-\alpha+\alpha f^{\epsilon}s)^{\frac{1}{\epsilon}} f^{-1} s^\frac {-1}{\epsilon}\...
1
vote
1answer
37 views

Why does absolute price inflation depend on interest rate while relative price inflation does not?

This is a follow-up of my previous question: How come there is inflation in a model with no money? I have answered my own question with an example. To briefly recap the example, consider a closed ...
2
votes
2answers
706 views

How come there is inflation in a model with no money?

I'm watching the video lectures of Financial Theory (ECON 251) by John Geanakoplos, Yale University. In Lesson 5, Chapter 4 at 33:41, Geanakoplos defined inflation as the ratio of prices between two ...
0
votes
1answer
93 views

Is there an "ideal" ratio of tax revenue to GDP? Or, at least, can I assume a higher ratio is better?

At the link below, you can see countries have a huge difference in ratios of tax revenue to GDP. Is it fair to assume that a higher ratio is better? Does raising a substantial portion of your GDP in ...
0
votes
0answers
19 views

Venezuela Hyperinflation in 2014 on an IS LM FX model

In 2014 Venezuela began experiencing some of the worst hyperinflation. I wanted to know how this situation would be represented on a IS LM FX model, and the consequences of the hyperinflation.
1
vote
1answer
45 views

What is the meaning of lagrange multiplier (especially in ramsey problem)

Consider lagrange function for ramsey problem: $L=E_0 \sum_{t=0}^{\infty} \beta^t \{u(c,l)+\gamma_t (s^t)[E_0 \sum_{j=0}^{\infty} \beta^j u_c (s^{t+j}) z(s^{t+j}) -u_c (s^t) b_t(s^{t+1})] \}$ where $[...
3
votes
1answer
233 views

Solving Euler Equation for standard DSGE Models

I am studying a rather standard DSGE Model with a standard Utility function $U = f(c_t, n_t, M_t)$ subject to a budget constraint. Now, tosolve the intertemporal optimization problem I have, or ...
2
votes
0answers
18 views

The influence of an increase in ATM's on the demand for central bank money

This is a question posed in Blanchard's book on Macroeconomics. The question is simple. Consider an economy with a central bank (CB) and private banks. The demand for CB money is then determined by ...
1
vote
1answer
37 views

Which model of capital accumulation do macroeconomists prefer, renting model or investing model?

Consider a closed economy with perfect competition, no government and no fiat money. Consumer goods are aggregated as a single type of goods and prices are measured in units of goods. For such an ...
1
vote
1answer
33 views

Cholesky Identification in Structural VAR

Can you suggest me a framework in macroeconomics or finance where identification of a Structural VAR model through Cholesky ordering is still considered credible (in your opinion)? I'm looking for a ...
4
votes
2answers
461 views

Solving Stochastic Dynamic Optimization Problems: A difficulty with Lagrange Multipliers

In Wickens' Macroeconomics book, in page 552, the author states the following: «The stochastic problem can be solved using the method of Lagrange multipliers, but there is a problem with this ...
1
vote
2answers
65 views

Would it even be possible for m2 to remain stable under positive interest rates?

Let's say bank A has 1 of assets and 10% reserve requirements. It lends to bank B 9 Then they lend back and forth so they both have 50 of assets and liabilities (or whatever they can). Then those ...
0
votes
0answers
11 views

Volatility indexes

I want to use a volatility index as a measure of economic policy uncertainty. The index that I want to use is CBOE Volatility Index: VIX, but I don't know if I only can use this for US or if I can use ...
1
vote
1answer
32 views

Wages are lower than 30 years ago in Italy, why?

Recently I've seen some statistics about wage growth in the European Union in the last 30 years and surprisingly, Italy is the only country with a negative value. So, what is the root of this problem? ...
1
vote
1answer
54 views

Does real wages have to increase for an economy to function from a mechanical point of view

Ive been trying to figure out why real wages should increase. If one can still buy the same stuff one could 20 years ago, isn't that good enough? Or does this necessarily imply that one has not taken ...
0
votes
1answer
21 views

How to deflate data from PPI

I have producer price index data. I have 4 products almond walnut pecan and peanuts, two of them start from 1991 almond and walnut (base year) another two from 1982 pecan and peanut. Does anyone know ...
1
vote
1answer
48 views

substitution effect

when ı study about link between leisure time and gdp my lecturer said that when people gdp as rise people want to work hard and he say that it is substitution effect. Also when ı research the ...
0
votes
1answer
26 views

Macroeconomics Question - GDP & GNP

If I, a citizen from South Korea, borrow $100000 from a Japanese bank to fund my purchase of a new Mercedes in the US, I'll be contributing to the GDP of US. However, will I be contributing to the GNP ...
1
vote
1answer
38 views

Why did Germany not suffer from Great Inflation in the 1970s/80s?

Comparing the inflation rate of some of the industrial countries around 1975 (Great Inflation) in between the two oil shocks of 1973 and 1979/80, it seems odd that most countries' inflation rate was ...
3
votes
2answers
58 views

Economic ignoramus question: if inflation is not caused by excess money but by supply constraints, why raise interest rates?

if inflation is not caused by excess money but by supply constraints, why raise interest rates? In fact, if higher interest rates suppress investment which would otherwise increase production capacity,...
2
votes
1answer
12 views

Is this really a valid description of AS&AD after lockdown?

I understand that in the short run AS decreased (supply chains) and AD increased (stimulus, post-lockdown behaviour). But what's up with the lines in the long-run? Also is this even a valid way of ...
0
votes
1answer
26 views

What would the theoretical ramifications of a mass sell-off of United States bonds be?

If a sovereign nation or nations were to sell off large amounts (say 30%) of United States bonds, what effects would it have on the United States' economy and debt situation? I am guessing that a mass ...
0
votes
0answers
23 views

Does Okun's law work?

When we consider the Okun's law do we consider the U3 unemployment rate or the U6 unemployment rate or do we assume both? Assuming that we consider the U3 unemployment rate what are the challenges ...
0
votes
1answer
26 views

How would inflation in the U.S. affect dolarized countries

Today I was reading about climbing inflation in the United States, so it got me wondering how would that affect (if at all) an small economy with the U.S dollar as its official currency. As a bit of ...
0
votes
0answers
16 views

Unemployment forecasting model specification

I am building a model to forecast unemployment using GDP, the CPI index and the industrial production index (INDPRO) as covariates. Since I am looking to use stationary time series, I gathered the ...
2
votes
1answer
38 views

Endowment economy

Consider an economy populated by two types of infinitely lived consumers, odd and even. There is mass one of each type of consumer. There is a single good in the economy. The economy starts at $t = 0$....
7
votes
2answers
101 views

Are there any behavioral macro models with rigorous micro-foundations?

I am looking for some paper that tries to establish rigorous micro-foundations the behavioral New Keynesian (or any other) macro models. This is surprisingly hard, most work on this topic (like De ...
0
votes
1answer
19 views

Problem with the definition of external debt

This is how external debt is explained in wikipedia: "In public finance, external debt (or foreign debt) is the component of the total government debt which is owed to foreign creditors; its ...
2
votes
2answers
90 views

What is business cycle frequency?

I am reading a paper by Michal Andrle, Jan Brůha, Serhat Solmaz (On the sources of business cycles: implications for DSGE models). The authors use data at a quarterly frequency for their empirical ...
1
vote
0answers
16 views

How to measure NDP?

NDP = GDP - capital depreciation I tried to understand how to measure NDP but above identity doesn't seem to explain how to do it. How to measure NDP, can anyone give me some explanation with a ...
0
votes
0answers
32 views

How can a country have both of its current account and financial account negative?

I was doing a research on France history record of its balance of payments. I found france was having current account deficit through out the past 13 years (since 2007). At the same time period, ...
0
votes
2answers
43 views

Why is nominal GDP deflated to get real GDP?

I am confused at the explanation below which explains why nominal GDP must be deflated to get real GDP. I thought the GDP deflator would decrease if prices are declining, so how does this result in ...
1
vote
1answer
29 views

What are good (i.e. non-random walk) time series to perform forecasting on?

I have developed a recurrent neural network (RNN) model for time-series forecasting. I now want to test its performance against more standard statistical/econometric models such as ARIMA or VAR. The ...
1
vote
1answer
33 views

Is there any economical rational for a government to maintain low property taxes and rather high work-related taxes?

I have recently heard an analyst arguing that where I live (Romania) we have very low property taxes (0.08% to 0.20% for residential buildings), but rather high work-related taxes. This was presented ...
2
votes
1answer
53 views

The Simple Math of Aggregation on Idiosyncratic Shocks

I am reading some lecture notes on heterogenous agents and Negishi approach. The question I have is a very simple math problem under this background. The setting is following: (I omit the irrelevant ...
5
votes
1answer
104 views

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}{\...
1
vote
1answer
48 views

No statistical significance of the TFP growth

I'm conducting an econometric analysis of the natural rate of interest in the euro-area countries using the following variables: as dependent variable I'm using the long term nominal interest rates (i....
4
votes
0answers
33 views

HANK model lecture notes + code

Can someone recommand me good lecture notes to understand macroeconomic heterogenous agent models such as HANK models (not TANK models, I know how them). Also if you know where I could find some codes ...

1
2 3 4 5
49