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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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 ...
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54 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 ...
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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 ...
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44 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 ...
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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,...
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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 ...
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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 ...
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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 ...
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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 ...
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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 ...
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1answer
43 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 $t = 0$....
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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 ...
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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 ...
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103 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 ...
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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 ...
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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, ...
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44 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 ...
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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 ...
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35 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 ...
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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 ...
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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}{\...
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49 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....
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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 ...
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Why is there such a big difference of purchasing power toward Coca-Cola between Euro in France and USD in USA, comparing to Big-Mac?

I have an assignment that requires me to pick an item and use it to create my own price level index, similar to Big-Mac index. In March 2021, the price of 0.5 litre Coca-Cola in France was 0.97 Euro ...
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Tauchen Hussey Process in Words

I've encountered the Tauchen-Hussey Process for discretizing an AR(1) a few times in homework, but never with an in-depth explanation as to what it actually does or how it works ... just "here's ...
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What are claims on a central government?

I downloaded some data from the World Bank's World Development Indicators database. I found a time series called Claims on central government, etc (% of GDP) with code ...
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2answers
118 views

A Simple Question about Labor Capital Ratios

I do not have much training in macroeconomics, so I want to know if this statement is accurate: "A \$30M dollar decrease in lending to businesses leads to a $45M decrease in aggregate labor ...
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Quarterly GDP and government spending data sources

I am looking for quarterly government spending and GDP data between the years 2019 and 2020 for as many countries as possible. I am posting this question in hopes that someone will point me in the ...
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1answer
50 views

Finding the set of Pareto Optimal Allocations

I am asked to find the set of Pareto Optimal Allocations in an economy where there are two agents namely $1$ and $2$, with the following utility functions and endowments. $$u_1({x_1}^1,{x_2}^2)= \beta ...
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46 views

Is normative economic planning value-neutral or value-based?

I'm really confused with the meaning of the terms 'normative planning' and 'system planning'. Investopedia says "normative economics is subjective and value-based". On the other hand, many ...
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50 views

Question on notation

I need to write a couple of simple equations for a homework project. I wonder what the convention is with subscripts. I do not want to use Greek letters and keep it simple. I have a few variables such ...
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1answer
41 views

Help to understand a Log-linearization and subsequent Differentiation with respect to time

I was reading the following paper: https://www.jstor.org/stable/2999442?seq=1#metadata_info_tab_contents At one point there are a couple of simple passages that however I did not fully understand. In ...
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133 views

Debt-to-GDP ratio in connection to inflation

On this segment of the Tucker Carlson show, interviewing Robert Hockett, as an advisor to Rep. Octavio-Cortez on the proposed Green New Deal, the following interchange ensues: Tucker: "On the ...
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1answer
59 views

What does "mass" mean in a Macroeconomic model?

A Solow model problem I am trying to solve asks me to assume that the economy consists of identical agents of mass 1. I have never heard of this term before, what does this mean?
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Recursive Macroeconomics - Practice Questions

I am looking for practice questions on recursive macroeconomics that focus on the following: Defining Competitive equilibriums (Arrow Debreu, Sequential Market, Recursive Competitive) for different ...
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1answer
143 views

Is a lack of "rules" dangerous for cryptocurrency

An issue/disadvantage that the gold standard had was a lack of mechanisms that forced economies to abide by the rules of the game. As a result, they could at any time de-monetize gold and therefore ...
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3answers
314 views

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 price ...
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115 views

US Real GDP Growth Rate

I am interested in finding the quarterly real GDP growth rate of US and have found the following two measures from IMF International Financial Statistics: Which one should I choose (Dark Green or ...
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2answers
97 views

Transparent Fractional-reserve banking as an alternative to the current system

I come from a layman perspective, but I've been trying to understand macroeconomics and finance. Currently I'm struggling with the current topic. Here I'm not worried about the system transition just ...
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What is the appropriate interpretation of the impact of an aging demographic on the supply of credit?

In the case of Japan, one of the more prominent examples of an aging society, loan growth has slowed at what appears to be a consistent rate with its declining workforce. However the US appears to be ...
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555 views

Criticism of "Modern Political Economics" by Varoufakis, Halevi, Theocarakis

The book "Modern Political Economics" is quite critical about "neoclassical economics", the basic claim being, if I understand correctly, that the models which "neoclassical economics" (armed with ...
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Historical classification of countries data

I am looking for historical classification of countries by year as industrialized, Less Developed, and Emerging Market Countries and/or any other classification. I have looked on the World Bank ...
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390 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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101 views

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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1answer
55 views

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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55 views

Debt cycle theory of Ray Dalio

I recently started reading Ray Dalio's book regarding BIG DEBT CRISES. He compared there, economy to the monopoly board game. There is something I don't quite follow in this analogy. If you ...
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Does the ECB provide a daily Inflation Expectations series for the Euro area?

I've been searching for market indicators for Inflation Expectations. The FED provides at least two, one of those being the T5YIFR from the FRED database. Regarding the ECB I couldn't find anything... ...
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What is liquidity overhang?

I read in an economics article the following: RBI Governor has decided to keep the unwinding of monetary policy gradual, calibrated, and non-disruptive while remaining supportive of the economic ...
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1answer
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Expected payoff calculation difficulty in the Bayesian environment of Bergemman and Morris

Suppose that we have two states of the world equally likely to occur, and say $\psi$ is the common prior of the state $\theta\in\Theta=\{G,B\}$. The types of the players are given by the following ...
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What are the major flaws of the RBC model and how does the New Keynesian model address them?

Looking for a generic answer to this question and potentially literature etc. that will help me study this question. Thanks in advance.

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