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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12 views

Economic Achilles' heels of global financial economy

The latest attacks on oil production in Saudi-Arabia highlights the need for risk managers to follow up on possible terrorist targets that can have a global impact on the global financial economy, ...
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Does free capital mobility invalidate the basic comparative advantage argument for free trade in goods?

In Herman Daly's article "Economics for a Full World", Daly states that international trade must be regulated because free capital mobility would invalidate the principle of comparative advantage (...
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What is the the return to scale of per capita production function?

if Y=f(AL,K) is CRS, a_k+a_L=1 by euler thm. but I wanted to know the return to scale of y=f(1,k) (1/AL divided) I tried z=p/AL , then py=f(p,pk) differentiate w.r.t p ; y=fp+fpk*k ...
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Why is that when one person or group gets a good or service, someone else will have to live without it?

! There's this statement in my Applied Economics book that I don't understand. Why is that when one person or group gets a good or service, someone else will have to live without it? I hope you ...
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21 views

What is it about the money market safeguards that increase volatility?

In recent coverage of the Fed's repo operation, I was struck by this line: It also indicated Wall Street is struggling to absorb record sales of Treasury debt to fund a swelling U.S. budget ...
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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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how can two countries have the same level of output per capita but different levels of factor accumulation and productivity? [closed]

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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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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2answers
45 views

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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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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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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Will a golden rule level of capital exist if the production function does not satisfy INADA conditions? [closed]

I am trying to think about a generalized form of Golden rule level of capital.
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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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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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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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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? [duplicate]

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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59 views

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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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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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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38 views

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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51 views

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

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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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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1answer
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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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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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1answer
25 views

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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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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1answer
29 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
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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
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Why growth of national income in current prices during inflation not measured in poor sections and poverty alleviation programs?

Here 1) dwindles means reduce, smaller. Here is my doubt: If inflation fluctuates how can we use the word 'dwindles', what it means here? 2) Why the growth rate during inflation not measured in poor ...
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1answer
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Can't we measure the growth in the income levels of poor?

Inflation has been a challenging aspect of policymaking. In such situations growth in the income levels of the population living below the poverty level can never be measured accurately (due to ...
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1answer
42 views

What would happen if fractional banking was phased out? [duplicate]

There are negative interest rates now and into the foreseeable future. This must mean there is too much money being offered compared to the demand for loans. Fractional banking acts as a multiplier on ...
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1answer
22 views

Derive the growth rate of an equation

I have the following equation: $$\mu =\left [s_{\pi }-v(s_{\pi }-s_{W})+\zeta \right ]$$ And I have to derive its growth rate, which is: $$\dot \mu =-\frac{v}{\mu } (s_{\pi }-s_{W})\dot v$$ Do ...
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Hep with total differentiation of an AD function [closed]

Is there anyone who can help me with a total differentiation exercize. I am starting with the following formula for AD: $$x=\mu ^{-1}(g+i+e)$$ Where $\mu$ is the Keynesian multiplier. And have to ...
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41 views

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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25 views

How does interest rate impact exchange rate?

When I’m using the forward exchange rate formula based on non-arbitrage theory, it tells me that a positive interest rate spread (i_domestic > i_foreign)would cause the forward exchange rate(units of ...
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The range of inflation dwindles means? [closed]

Basically, inflation has been a challenging aspect of policymaking in India because of its level (i.e., range in which it dwindles) and stability (how stable it has been). Here dwindles means what?
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What are the factors on which value of all resources ( good, silver, cash land etc. ) found in world changes over time?

And followed by, Does it right to say that, if any country become rich then other must become poor and vice-versa. If no, then Is it possible that, in certain conditions, all Nation in the world can ...
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Regarding Macroeconomic Models

I've recently started my PhD and upon looking at my textbook (the sargent one) I found that it differed greatly from my Masters textbook (Romer) and in turn my undergraduate macro text (williamson). ...
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Causes of trade deficit: Multiple views

I am trying to understand the causes and macroeconomic implications of running a trade deficit in the United States, and I came across a few different views on this topic. I'd like to know if there ...
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1answer
44 views

Is it bad for the economy of a country if forreign firms buy companies?

If a forreign firm buys a company. For example a Russian firm buys a British company. Is this good or bad or neutral for the British economy? As I see it, the profits of the company will be going ...
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Differences between GVA and NVA?

I have studied these 1) Gross value added= value of output- intermediate consumption. 2) Net value added= gross value added- depreciation. But how could we say "Net value added = Gross value of output ...
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Why a Current Account deficit implies a Financial Account surplus [duplicate]

Every macro textbook out there states that if a country has a Current Account deficit, it must have a surplus in the Financial account, but I have not heard a convincing explanation. Imagine a ...