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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Using the Federal Reserve's Implicit Price Deflator to Convert to 2020 Dollars

I have a list of government expenditures from 2011 to 2018 as shown below: 2011 2012 2013... 2018 $30m $35m $42m $120m How can I use the Federal ...
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Why is deflation a likely short-term of an increase in M2?

The year-on-year growth in M2 — a broad measure of US money supply — has rocketed this year due to the efforts of monetary and fiscal policymakers to reduce the economic damage caused by the pandemic. ...
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Total factor productivity (TFP) estimation in R

I'm trying to calculate TFP with the estprod package in R because this package allows me to calculate with Gross-Output (like with levinsohn petrin) but I have ...
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24 views

How is the GINI coefficient half the relative mean absolute difference?

I've tried to derive a proof myself and have looked through a lot of sources but can't seem to find an understandable mathematical explanation/proof for why this is the case. I found one at(https://...
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1answer
37 views

Max of a profit function: partial derivative of an integral function?

I am struggling with the maximization of the following profit function in a New-Keynesian model. Here there is the FOC. $$\frac{\delta}{\delta Y_t(i)} P_tY_t- \int_0^1 P_t(i)Y_t(i)di = \frac{\delta}{\...
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Are rational expectations in economics purely forwards looking, or can they have backward looking components?

Are rational expectations (Muth, Lucas, Kyland and Prescott) in economics purely forwards looking, or can they have backward looking components?
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How would Russia winning the COVID19 vaccine race impact its economy? [closed]

According to reports (see links below), Russia may be the first country to declare victory in the race for a COVID19 vaccine and distribute it on a mass scale. Whether they will be or won't be, isn't ...
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What industries, if any, are best when nationalized/government-run?

In free-market economics, private firms are said to be more efficient and better for consumers as competition between private firms in an industry breeds innovation, low cost (for consumers), and ...
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What steps can a country (or island) take to prevent another Turkey? [closed]

I'm hearing a lot about what's happening to Turkey and its economy. High inflation, meager foreign currency reserves. Sounds like normal economic issues any other country can face. What steps can a ...
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35 views

Is it legitimate to assess the resilience of industries and sectors to covid19 through the stock market? [closed]

I would like to assess the resilience of some sectors in Europe (for practice and also make a project to show in case I want to go to a better uni) but I honestly lack data, and it seemed to me the ...
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What does “writes a check to Congress in exchange for them” mean in this context?

On page 192 of the 5th edition, George Edward Griffin begins to describe the "Mandrake Mechanism", chapter ten, in "The Creature from Jekyll Island". First, the Fed takes all the ...
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Literature on DSGE models featuring a financial sector

I recently read a ECB primer on DSGE models featuring the financial sector and became interested in the field. I also started to read some of the earlier literature in that field (e.g. Gertler & ...
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42 views

What does full employment mean?

I am a bit confused about the term "full employment". I am currently learning about the labour market model, and how that is influenced by changes in aggregate demand. My textbook states &...
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22 views

Effects on Early International Travel Ban and Economy

Can't find articles regarding on this. Had the country set up an early international travel ban to avoid this Covid-19 pandemic, can that country survive thru local businesses after 4-6 months or more ...
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27 views

When is the upward economic convergence in the EU estimated to happen?

Although the regional cohesion, i. e. the socio-economical convergence of the East and the West has been one of the EU's main goals, some economists seem to dispute there's any evidence for them being ...
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63 views

Do countries with centrally-planned economy have Entrepreneurship as a factor of production?

Let's don't count self-employed people without other employees (like "lone wolf" craftsmen) and people who have an illegal business as entrepreneurs. By centrally-planed economy I mean an ...
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29 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 ...
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3answers
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How are recessions even possible if its impossible for banks to lose money?

When a bank issues a loan, the money must end up with another bank. Therefore, the banking system as a whole can never lose money. Only the dumb banks which make loans that arent repaid can ever lose ...
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31 views

Can anyone help me understand the Motrtensen-Pissarides model?

I am seeking help with the Mortensen-Pissarides model in discrete time? Basically, I was given the following in class example (which we didn’t complete do to time constraints associated with the end ...
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1answer
55 views

Best history of macro book?

I'd like to know if you know some book that summarize the history of macro ? I'm in Master (after undergrad) so I don't ask for beginner's book. I've begun to read "a history of macroeconomics ...
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33 views

Why do all/majority of loan contracts charge nominal interest rate instead of fixed real interest rate?

As far as I understand, all/majority of loan contracts charge nominal interest rate, there are (almost?) no loan contracts that charge fixed real interest rate. Why is it so? Normally I would expect ...
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Still don’t understand why a trade deficit must be financed by foreign borrowing (even after reading other answers)

Maybe my understanding of how the real world works is now clouding my ability to understand the theoretical because I aced this stuff in college, but now can’t wrap my head around it. Yes, I’ve read ...
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1answer
43 views

Why does a current account deficit contribute to making a country a “sitting duck” for currency speculators?

George Soros had this to say about the factors surrounding his famous short of the British pound: The U.K. had a large current-account deficit…, modest FX reserves and no capital controls to rebuff ...
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26 views

What is the probability of an unemployed worker receiving no job offer during a time period?

we are currently covering one sided search models and I had a question for you all. I kind of understand the raw calculus behind finding the probability of a job offer over a time interval h, but what ...
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51 views

What was the Rogoff & Reinhart spreadsheet mistake?

In class our professor said that the Rogoff and Reinhart research on growth and debt was discredited due to spreadsheet mistake. What was this mistake? Also did they perform their research in excel ...
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What is an estimate of the value of the world's assets?

Gross world product is on the order of 80E12 $ per year (PPP). Where can I find an estimate of the net value of the world's assets (companies, properties, infrastructure...)? Preferably with some more ...
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97 views

Does the concept of Capitalism increase the net wealth?

I am currently going through a video by Peter Schiff from the occupy Wallstreet period where he is talking with the protestors at the time. I'm pretty early in the video and Mr. Schiff makes the ...
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1answer
60 views

How can a government save, if it has deficit?

I am reading an IMF paper about China's debt (link) which says: ❝ Despite a large augmented fiscal deficit of 10 percent, fiscal savings remain higher than other countries, resulting from the biased ...
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16 views

How would consolidation in the brokerage space make things better for banks?

There is a bit from an article I don't quite understand: China has been eager to whip its brokers into shape. Officials want capital markets to lessen the burden on banks, which last year provided ...
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GDP accounting: Insurance spending belong to which part of GDP?

We know that $GDP = C + I + G + NX$, where $C$ is household consumption and $I$ is private investment. I don't know whether insurance spending (e.g life insurance) belongs to $C$ or $I$. I've googled ...
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46 views

Policy ineffectiveness proposition

Suppose, the Aggregate supply is given by the Lucas Supply Curve - $y_t = ȳ + b(P_t - E_{t-1}P_t) + μ_t$ where $μ_t$ is stochastic supply shock (following standard normal error properties). Aggregate ...
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Are there historical cases of country A printing the currency of country B for the main purpose of economic warfare?

I recently read in a news article that a large amount of Libyan banknotes printed in Russia were seized in Malta following an order coming from the USA. Both Russia and the USA have geostrategic ...
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1answer
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Are taxes,subsidies and social money transfers(i.e. welfare) accounted in money velocity?

As far as I know, money velocity is an average amount of times a typical, say, dollar, gets spent on goods during 1 year. So if it's spend N times to pay for goods, then money velocity equals N. But I ...
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2answers
31 views

What are the determinants of the natural rate of interest and how market rate converges to it?

I'd like to know how is determined the natural/neutral rate of interest. Moreover, how the market rate can converge to it ? If you have some references it would be great !
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34 views

How could Euro bonds serve as a “safe haven” asset in the long run?

The German Bund has been the major safe-haven asset in the Eurozone despite the advent of the Euro. However, I noticed that there is mounting anticipation around a potential 750 billion worth of Euro ...
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39 views

Log-linearization of an intertemporal budget constraint

I'm trying to recreate the paper "Learning about Monetary Policy Rules when Long-Horizon Expectations Matter" by Preston. At one point he says that he log linearizes the intertemporal budget ...
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63 views

What did Krugman mean by “cult of amauterism” when describing why Britain fell behind in economic growth race?

From Krugman's macroeconomic textbook: It’s one of the classic questions in economic history: Why did Britain, the home of the Industrial Revolution, by far the world’s leading economy for much of ...
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1answer
38 views

Is Currency Devaluation a cause or effect of interest rates?

I understand that Federal bank/Goverment can manipulate the currency market and devalue its currency by printing more money or buying foreign currencies/assets (essentially increasing the supply of ...
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13 views

Why is FDI included in GDP computation but not in GNP? Similarly why is FPI included in GNP computation?

I know the difference between GDP and GNP is that the former is confined to domestic borders and the latter to nationals across the world. I also know that FPI is shorter duration and more volatile ...
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1answer
44 views

How buying bonds indirectly from the government prevents the central bank from financing government deficit?

From Krugman's macroeconomic textbook (highlighting is mine): "In an open-market operation the Federal Reserve buys or sells some of the exist- ing stock of U.S. Treasury bills, normally through ...
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1answer
32 views

Why is sovereign rate a reference?

I would like to know why we always focus on 10 years sovereign rates when we talk about interest rates ? Let me clarify. I'm reading a paper from the Bank of England that emphasizes the fact that ...
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2answers
42 views

How do I predict Macroeconomic indicators?Or are there any free resources where I can get the predicted values?

I am building a time series forecasting model in which I am considering the macroeconomic indicators as predictors.I wanted to ask 2 things How do I get the future values?I have seen trading ...
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1answer
58 views

What are some examples of goods that entrepreneurship-intense?

Entrepreneurship is considered to be one of factors of production (the other factors of production are capital, labor and land). According to Heckscher–Ohlin model, a country that has an abundant ...
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1answer
32 views

What is the characteristics of economic downturn and which countries experience economic downturn from 2010 to 2018?

I would like to know the characteristics of economic downturn. Is downturn the same as recession? and which countries experience economic downturn from 2010 to 2018?
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1answer
47 views

How are historic economic statistics calculated?

Sources like Our World in Data can have statistics that date back hundreds of years. Specifically, the Our World in Data source has a graph of GDP Per Capita in England dating all the way back 1270. ...
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1answer
39 views

Does levying a new tax on production increase GDP?

Consider a society with no taxes on (e.g) commercial land ownership. One day the government impose a small tax on land owned by the foresting industries. I would assume that prices on goods produced ...
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32 views

Increased production costs associated with increased output produced? Why do firms have prices increase with the SRAS or Supply Curve?

In my textbook, it said (this is for SRAS and AD, but I'm also going to apply this a bit fo microeconomics.. sorry for mixing, but my question applies in both ways, I believe) "The average price ...
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1answer
51 views

Would directing more money to science and research and development be an effective response to recessions?

Typical responses to recessions is to follow Keynesian economics and support demand. Would directing money towards science and research and development be a better long term solution to recessions ...
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2answers
65 views

Need examples for confusion about rent-seeking. Who is the seeker and what is the rent?

Please answer assuming I have no background in economics. I keep coming across this term in various articles (Example) but get more confused every time I look up what it means. I have read about the ...
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1answer
34 views

How to determine a corner solution? Growth Model

I'm working on a paper called "Fertility clubs and economic growth" of Ahituv and MOav (linked below) and arrived at this point: The paper shows three optimal conditions respect to ...

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