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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6
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2answers
122 views

Who regulates the balancing of the books for commercial banks and how is this done? Is it public information?

I've just read Money Creation in the Modern Economy, an article published by the Bank of England. This article brings about a lot of questions in my mind. This article talks about money being created ...
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1answer
134 views

Secular Stagnation: A Plain-English Explanation

Put aside the mathematics and jargon for a couple minutes. If you had to explain the concept of secular stagnation to an (intelligent) person with no economics background, how would you go about doing ...
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1answer
109 views

Solow-Swan production function- What is '$L$'

If $L$ represents the amount of labour in the Solow-Swan production function: $Y/L$=$f(K/L)$ how can $Y/L$ equal 'per-capita income' if $K/L$ is the capital/labour ratio? I thought per-capita ...
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0answers
183 views

Hot Topics in Labor-Macro

I'm interested in currently hot research topics within Labor Macro. I'm only aware of the debate on the recent shift in the US Beveridge curve, and, of course, the olden but golden Shimer puzzle. ...
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1answer
122 views

How does inflation in income go 'hand in hand with inflation in prices'?

Source: p 594, Economics, 3 Ed, 2014, by N G Mankiw, M P Taylor Yet further thought reveals a fallacy in this answer. When prices rise, buyers of goods and services pay more for what they buy. At ...
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1answer
257 views

Yield and interest rate?

Are they the same thing? Is yield the annualized return rate? Why when yield rise, yearly return increases but price falls?
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222 views

Why plug deficits with bonds rather than printing money?

The UK is running a budget deficit £107 billion a year. Inflation is currently running at 1%. Given these facts, why do they plug the gap by selling debt rather than just creating the money to cover ...
2
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1answer
576 views

What is some intermediate or advanced macroeconomics textbook use general approach and focus on general topics?

What is some intermediate or advanced macroeconomics textbook that use general approach, cover major formulas, math intense and focus on general topics similar to Romer's and Branson's Macroeconomics ...
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1answer
116 views

Will the goods market be in equilbrium along the AD curve?

This is a question which was asked in the entrance to Jawaharlal Nehru University's (New Delhi) entrance for their post-grad program specializing in International Economics in 2014. Which of the ...
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3answers
1k views

Has the natural rate of unemployment decreased with modern travel and the Internet?

The natural rate of unemployment is a combination of structural unemployment and frictional unemployment. Structural unemployment is caused by a surplus of labor at a given wage in a given area. ...
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2answers
898 views

What is the true source of dynamic(Pareto) inefficiency in OLG models?

This question confuses me for some time. My first impression is that Pareto sub-optimality is due to feature that old generations will consume everything without any incentive to trade. But after ...
2
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2answers
1k views

How do saving and investment work in macroeconomics?

It is stated that saving equals investment. However, suppose the interest rate rises and people save more. However, businesses will borrow less so investment decreases. Hence investment is less than ...
3
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1answer
72 views

Capital in a credit frictions model

I won't go into detail of this model because it's really just one point that i'm confused about. This question is based on a model by Matsuyama (2007). Agents are deciding whether to invest in a ...
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1answer
189 views

Stagflation and the Labor Force

Which of the following best explains how an economy can experience stagflation. Women and teenagers stayed out of the labor force. Negative supply shock cause the factor prices to increase. Official ...
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0answers
733 views

Government using tax to cover for spending without increasing inflation

If, at full employment, the government wants to increase its spending by 100 billion without increasing inflation in the short run, it must do which of the following? Raise tax by more than 100 ...
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2answers
929 views

Why is overlapping generation model not a main model in macroeconomics?

It seems that overlapping generation model has far more realistic assumptions than ordinary Ramsey-Prescott RBC model for use in macroeconomics. Why is Ramsey-Prescott ones, even New Keynesian ...
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2answers
178 views

An increase in Japan's demand for US goods would cause the value of dollar to appreciate?

An increase in Japan's demand for US goods would cause the value of dollar to appreciate? Why is that? The official answer is "Japan will buy more U.S. dollars." However, my thought was that isn't it ...
3
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1answer
126 views

Divergence of a variable in forward-looking models. Blanchard-Khan conditions

(1) This post is, first, regarding the issue from Romer's Advanced Macroeconomics, 4 ed. Chapter 6.4 on nominal rigidity, pp. 264-266 to be precise. He sets out a simple model with microfounded IS ...
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0answers
455 views

AS-LM Model and derivation of the LM curve

When we derive the LM curve, we assume that supply of money is exogenous. However, let's say the central bank has some target interest,r1, and it adjust supply of money to keep interest rates equals ...
4
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1answer
120 views

Reasons for the recent rise in long-term unemployment

Kroft et al document the raise of long-term unemployed in the US during the recent crises. This is an impressive figure from their paper: They show that the raise does not come from compositional ...
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2answers
720 views

How capital outflow is calculated?

I would like to understand what is the meaning of the following phrase: "Capital flight from Russia in 2014 was 151 billion dollars." First I would like to know how such a calculation can be done. ...
3
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1answer
128 views

What would be the GDP of Algeria without Oil & Gas?

Facts : *Algeria's GDP is 230 B$, *Oil & Gas account for 30% (70 B$) My simplistic reasoning would say : Substract 70 from 230 and get a new GDP of 160 B$. ...
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1answer
446 views

Piketty's Return on Capital

How exactly does Piketty et al's method (as in his book) for computing the interest rate over time and countries work? I know that they use reported tax returns, and that some criticize them for also ...
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1answer
10k views

How does a cash deposit change the M1 measure of the money supply?

The question asks what is the immediate effect of the cash deposit on the M1 measure of money supply. The official answer is "There is no change in the M1 measure of the money supply. (Demand deposits ...
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1answer
44 views

Reject worker after match

In the DMP family of labor models, we typically have $V$ denoting a vacancy and $J$ denoting the value of a job. $V$ typically becomes 0 through free entry. Say a firm get matched with a worker of ...
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0answers
46 views

Influence of a TTIP on the GDP of a european country

So my question is simple but what I would like to know is if my method of calculating something like that plausible or not. So it goes like this : the formula we took at lecture for calculating is ...
2
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2answers
170 views

What are the consequences of government spending by imposing tax?

The question is "If the government of country Z increases spending by \$12 million dollars and raises tax collections by the same amount, then what will be the overall impact of theses moves on real ...
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424 views

Why some countries are wealthier than others?

Twin-peak of economic growth is one of the concepts discussed in economics. Most of explanations for poverty traps are baseed on the lack of infrastructures and public goods. How could be another main ...
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1answer
491 views

Shifts in demand curves

When plotting a demand curve for a good, lets say carrots with price on the y-axis and quantity demanded on the x-axis. A shift any determinant of demand other than price of carrots results in a shift ...
2
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1answer
639 views

Defining a Competitive Equilibrium for a two Period Model

Consider an economy that lasts for two periods populated by a representative consumer/worker, a representative firm, and a government. After these two periods, the economy ends. The question asks me ...
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1answer
566 views

Value added by sector of economic activity

I am trying to make a pie chart of value added by economic activity (as a % of gdp). I am trying to use data from world bank for each of the four sectors: manufacturing, agriculture, industry, ...
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1answer
414 views

Macro Economics Question: How will this curve shift?

I am studying for a Macroeconomics Test on the Money Market and was wondering how the Demand Curve for Money would shift when there are changes in Taxation, Income, and Price Levels? (i.e. it would ...
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0answers
26 views

Papers about doing development projects by government funding [closed]

I want to read some papers about negative and positive aspects of doing a lot of development projects by government funding from the viewpoint of macroeconomics. However, I can't find anything by ...
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1answer
44 views

Price distribution: Negative values?

In their equation (5), Kaplan and Menzio claim that the price distribution in their Burdett-Judd market is given by $$ F(p, u) = \{u \cdot A_1 \left[1 - \left(1 - B_1(u)\right)\frac{(r-c)p}{(p-c)r}...
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1answer
118 views

Gali and van Rens: The Vanishing Procyclicality of Labor Productivity

Let's see how questions like the following are taken here. Gali and van Rens, 2014 show that empirically, the correlation between $Y, Y/L$ has been declining over time. In fact, it only was a "real ...
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2answers
574 views

on economic growth and Second Welfare theorem

While I was studying eighth edition of Mankiw's Macroeconomics, in chapter 9 on Economic Growth(pg. 245), the author mentions : "Some economists have proposed increasing the incentive to save by ...
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1answer
318 views

DMP: Two Labor Markets

Consider the following extension of the standard DMP model, in which we have two labor markets with different returns, indexed $i$. The markets are completely separated and firms and workers can only ...
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3answers
4k views

Right definition of natural rate of unemployment?

Earlier I studied macroeconomics from Blanchard. But now while reading Mankiw's Macroeconomics I found different definition for natural rate of unemployment. According to Blanchard, "the rate of ...
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2answers
682 views

What is the relationship between S&P500 and the US dollar

In the recent past, both the S&P 500 and the USD (against other currencies) have appreciated a lot. From what I understand, if USD goes up against other companies, the major companies of the S&...
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2answers
117 views

Chinese products: are we lowering our everyday life quality? [closed]

It's true that now we can purchase a whole load of useless stuff spending less than in the past, but is it really worth it? It feels like you buy something and the next day it's already broken. Is ...
2
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1answer
368 views

What would be the disadvantages of a TTIP?

Well the question kind of says it all, what I would like to know is,if a TTIP between America and EU is put in place even though not only Europe and America will benefit from it but also other ...
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2answers
208 views

Finding economy's factor price for perfect complement production function

Q.Consider an economy producing a single good by a production function $$Y = min [K, L]$$ where Y is the output of the final good. K and L are input use of capital and labour respectively. Suppose ...
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1answer
506 views

Financial investment in the composition of GDP

In the production function Y = C + I + G + NX Does foreign investment in domestic assets (i.e. foreign buying of domestic bonds) - and vice versa - come under the Net Exports variable? Which ...
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2answers
4k views

Investment = Saving relation in an open economy

I am reading the book Macroeconomics by Olivier Blanchard. It states that an alternative way of looking at an goods market equilibrium is investment = saving. In an open economy it states the ...
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Simple Neoclassical Growth Model with Elastic Labor and Non-Standard Capital Adjustment Costs

I have the following social planner problem to maximize $\{c_t, k_t, n_t \}$ $\begin{gather*}E_0 \sum_{t=0}^\infty \beta^t U(c_t, 1 - n_t), 0 < \beta < 1\end{gather*}$ subject to $\begin{...
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1answer
27 views

Data: Vacancies in the US before 2005

Shimer (2005) says These [separation shocks] introduce an almost perfectly positive correlation between unemployment and vacancies, an event that essentially never been observed in the United ...
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1answer
103 views

Equality, Taxes & Business Growth

First, I'm not an economist - just a regular Joe interested in a small part of the subject. Second, I apologize if this is a better question for the 'politics' stack exchange, but I figured I might ...
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48 views

Separation shock and business cycles

In the context of the Diamonds-Mortensen-Pissarides models, there was a reasoning why a separation shock cannot fit business cycles. I think it was brought forward by Shimer, but I could be wrong. ...
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1answer
114 views

What are the widescale economic ramifications of people holding onto their money instead of spending it?

Pretty simple question: people get rich by saving more money than they spend. What are the implications of people holding onto their money instead of spending it? Do rich people save more money (...
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1answer
94 views

The most frequent causes of economic downfall?

In retrospect what are the major parameters, most frequently causing countries' economy to reduce its size and/or growth. Global Financial Crisis? Regional instability? Local Banking Sector failure? ...