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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Finding Balanced Growth Path Solow model without technological change

Hi all, I am having troubles with this easy assignment. In particular point (c) is taking a lot of my time and energies, I have already obtained the law of motion for capital per worker, and I got ...
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Liquidity Trap Question? Return to equilibrium

As far as I inderstand a liquidity trap occurs when increasing the money supply is not able to stimulate the economy because people prefer hoarding the cash rather then investing in debt securities ...
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How will economy find long-term equilibrium in AD-AS model in case of a negative supply shock?

Let's suppose that negative supply shock happened that affected SRAS, but not LRAS. Let's also assume that previously there was long-run equilibrium at point $A$. Due to negative supply shock SRAS ...
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Suppose the RBI reducces money supply by 5%. What happens to aggregate demand and supply?

Suppose the RBI reducces money supply by 5%. What happens to aggregate demand and supply?
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Do reserves at Bank of Canada count as money?

I read the following three statements concerning M1 and M2 in Canada: a) "M1 consists of currency held outside the banks and chequable deposits of individuals and businesses." b) "M1 does not ...
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NIPA sectoral balances, understanding influences on household sector

we know that the private sector balance = S-I = Y-C-T-I lets split it into 3 sectors: Households, Firms, and Banks. Suppose that that the HH balance equals +100 so far into the period. Q1) Then, a ...
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Is there a reproducibility crisis in Economics?

I am an undergraduate economics student, and came across this paper by John Ionnadis on 'The Power of Bias in Economics Research'. the findings are quite bleak. https://academic.oup.com/ej/article/...
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Falling Real Wages

Economist Lester Thurow said, "It used to be that if you were an American and relatively unskilled, you got an American premium, cause you'd work with more raw materials, better capital, better ...
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What does the vertical axis of the Kuznets curve depict (mathematically)?

I do not understand what does the word "inequality" means on the vertical axis of the Kuznets curve. Can someone please explain?
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Does Efficient Market Hypothesis make anticipated monetary policies useless?

Since the market perfectly captures all the information, is it true that any anticipated monetary policy has no impact on equity prices? Or the “information” has an immediate impact but the “event” ...
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How are PPP, nominal exchange rates and inflation related?

This Forbes article discusses how changes in the market exchange rate can be used to estimate an inflation rate thanks to the principle of purchasing power parity (PPP). Can someone distill this ...
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Transversality Condition

I am reading the first section of chapter 10 of the Obstfeld and Rogoff textbook Foundations of International Economics and I have a doubt in how the transversality condition is obtained. Even though ...
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Macroeconomics for Mathematicians

I'm coming from a math background (so my mind is set up for Definitions-Observation-Lemma-Proof frameworks) and looking for recommendations of a Macroeconomics textbook mainly devoted to growth models ...
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Monetary Theory Money Model Help

the following is a monetary theory overlapping generations model question and I wonder whether I have the correct answer. Can someone please let me know? Thanks! Question: Suppose there is a fixed ...
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How to interpret the sum of company revenues?

The introduction to the Fortune 500 states: In total, Fortune 500 companies represent two-thirds of the U.S. GDP with $13.7 trillion in revenues. I checked, and this is indeed the sum of those 500 ...
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To what extent did tsetse fly affect African development today?

Based on the fact that the insect is unique to African ecology and its impact both on humans and livestock, can it be argued that the lag of Africa's development today is at least partially due to the ...
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Does filling the spot of a retiree count as a job created?

When a person retires, and the company hires someone to fill the job of the person that retired, does that count by the BLS(Burea of labor statistics) as a "created job"?
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Why did the sudden end of Japan’s economic boom and its economic decline occur just around the time of the dismantling of the Soviet Union?

Both happened at about the early 90s (or at the end of the 80s). Was there some kind of connection? Or was it just a coincidence?
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How to estimate Robot density in a country?

I'm writing a thesis where a key element is the degree of automation (for Switzerland) through time. I was counting on the IFR to get those data but I need to pay 2000k to get them... Does anyone ...
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How does an increase in the minimum reserve requirement affect the monetary base?

Monetary base is defined as currency+currency held by banks+deposits of banks at central bank. We assume that the current reserve is below the minimum reserve requirement. Which component of monetary ...
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Understanding GDP vs Real GDP

I am totally new to Economics. I have issues understanding GDP and real GDP. I have listed 3 statements below, can someone tell me if those makes sense ? GDP Gross Domestic Product is used to get an ...
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Combining functions that satisfy the Inada conditions

Suppose $f: \mathbb{R} \to \mathbb{R}$ and $h: \mathbb{R}^n \to \mathbb{R}$ are functions that satisfy the Inada conditions, and also $$ \forall i: \lim_{x_i \to \infty} h(\mathbf{x}) = \infty. $$ ...
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Who was the first to model sequential market equilibrium?

As a PhD student the standard macroecononomics education I have received (and continue to receive) revolves around the most realistic model of market structure ive seen to date, that being sequential ...
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List of production functions that satisfy the Inada conditions

It is known that in the class of CES production functions, only the Cobb-Douglas production function satisfies the Inada conditions. Which other functions satisfy the Inada conditions?
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Steady state growth of output

In the long run Solow steady state, the growth rate of output in a country is g + n. If there is some other country with exactly the same properties of the first country and the same initial ...
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Is there a list of U.S. government regulations or actions that depend on government produced statistics?

I'm interested in compiling a list of government actions that depend on government produced figures. For example social security benefits depend on the CPI. I don't know if such a list already exists.
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Non-traded goods in Two Country New Keynesian Model

I am working on a two-country New Keynesian model, where I include traded and non-traded goods. The final good is produced using traded and non-traded inputs: $$ Z_t=\bigg[a^\frac{1}{\kappa}Z_{T,t}^{\...
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Why is it important to look at all three different ways when looking at the macroeconomy of a country?

we have and use three different ways of deriving the Gross Domestic Product namely Output, Income, and Expenditure (or final consumption) methods but why is it important to view the GDP from all three ...
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Explaining Stagflation

High demand for goods drives up prices, and also encourages firms to hire more; and likewise high employment raises demand. Then why stagflation? According to above explanation, it should not exist.
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What are the effects of abolishing the minimum wage?

There's this one guy out there, Peter Schiff, and he aired on Joe Rogan a while back. One part of the podcast really caught my attention, and it was when Schiff said that the minimum wage should be ...
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Why is the U.S. economy more responsive to monetary stimulus than the euro zone, Japan, China and other major trading partners?

I've read in a Reuters article that The U.S. economy tends to be more responsive to monetary stimulus than the euro zone, Japan, China and other major trading partners. Is this unambiguously true ...
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Double counting because of gross mixed income

I was learning the income method of calculating GDP when I stumbled upon this doubt. As per the definition given in the book GDP = GDI (Gross Domestic Income) = Compensation of employees + Gross ...
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What does it mean if a country's exchange rate is said to be “overvalued”?

For instance, China's or Switzerland's currencies are often said to be overvalued.
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Are my conclusions correct in context of these examples of forceful extraction of money?

There are two examples, one for a bandit, the another one is for the government. Suppose we have a simple economy, a bandit and a teacher. The teacher can teach the bandit, but the bandit can't offer ...
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What would happen to the world GDP if we run out of minerals to mine but not of sources of energy?

I was thinking about how the depletion of minerals (metals and all material we mine from the Earth) will affect the GDP of the world. I read somewhere that at the current extraction rate, we will run ...
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Does ownership determine efficiency in an economic system?

what determines efficiency in an economic system? a) ownership b) competition c)both d) none I am confused between option (C) and option (B) because I am not sure about whether ownership can be said ...
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1answer
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When to use a lagrange multiplier?

I have a question in regards to the use of Lagrange multipliers in macro models. I have seen that when writing a Lagrange there are two ways to write the Lagrange multiplier: 1) Indexed or 2) ...
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How would increase labor productivity lead to improved living standards of people in an economy?

I would like to know more about the mechanisms through which higher labor productivity would translate into higher living standards for a population in a given economy.
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Why is macroeconomics about general equilibrium?

In a fairly popular paper published a couple of years ago ("On the future of macroeconomic models"), Blanchard (2018) makes the following statement, among other "widely believed propositions": (i) ...
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debt monetization & Fed's involvement in the Repo market; how does that affect velocity of money?

On September 4th 2019, The Fed started monetarizing debt once again and has added $385 Billion to the balance sheet as of 1/22/20. https://fred.stlouisfed.org/series/WALCL Around the same time in ...
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What is the difference between Q4/Q4 and Y/Y GDP growth?

Per US media, the US economy grew 3.1% in 2018 Q4/Q4 and 2.9% in 2018 Y/Y. 2.9% seems the reference number in various databases (World Bank, Reuters, Bloomberg, etc) but what exactly does Q4/Q4 mean ...
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If a new company arrives into market with great idea and achieves sales, is it away from other companies sales?

If a company arrives into world markets (let's say world markets has total of 100M€) with a new innovation and achieves sales of 10M€, is the money achieved away from the sales of other sellers on ...
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Why did foreigners keep buying Swiss francs at -41% (not a typo) interest rate in the 1970s?

A Bloomberg (opinion) piece notes In January 1975, the Swiss government held an emergency meeting and then took the extraordinary step of slapping a 41% annual penalty on foreign deposits. But even ...
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How would M2 and Velocity of M2 be affected if balance sheet expansion continues long-term?

Let’s assume that the Federal Reserve does NOT discontinue injecting liquidity into the Repo market but, instead, continues a long-term policy of continuous and regular liquidity injections. Let’s ...
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Are interest rates low because of low aggregate demand? If so, what are the reasons for low AD?

Interest rates seem quite low in most of the western world and it looks like the market thinks this will last for a long time. 10-year government bonds in US, Canada, Australia, France, Japan, ...
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Why would overemployment mean that labor is used inefficiently?

If labor is being used efficiently, there is no excess unemployment or over employment. This phrase from Khan Academy struck me as quite strange. Why on Earth would over employment mean that labor ...
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Deprivation vs. Marginalization

I see many studies of poverty use 'marginalization' and 'deprivation'. What are the difference between them?
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Economic move from agricultural to manufacture to service in ?what after service sector?

is there anything after service sector .in oecd nation most of employment in service sector.is there anything like post service world.
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Why is oil being traded in U.S. dollars?

I am trying to understand the concept of money,forex, depreciation of currency,devaluing,...(just the basic stuff). While I was reading about why oil is being traded in U.S. dollars, on the internet, ...
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Does stagflation lead to redistribution of wealth?

Suppose there is inflation in our country, but we take a short term, thus some prices are sticky and there is non-positive "growth" of the real GDP. In other words, we experience stagflation. If I ...

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