Questions tagged [macroeconomics]

Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

Filter by
Sorted by
Tagged with
4
votes
1answer
703 views

New-Keynesian Model: Log-linearizing the firm's FOC

In Gali's book (chapter 3), the FOC of a firm is given by: $$(\sum_{k=0}^\infty \theta^k E_k(Q_{t,t+k} Y_{t+k|t} (P_t^*/P_{t-1} - \alpha MC_{t,t+k} \beta_{t-1,t+k}))) = 0 $$ Basically, the first ...
8
votes
5answers
3k views

How does a reduction in consumer spending in favour of consumer saving, affect economic activity?

Let's say our government runs an advertising campaign, encouraging its citizens to reduce spending money on consumer items, and instead save more money. Let's say the campaign is successful, and ...
0
votes
1answer
5k views

What are the alternative uses of unlimited wants and scarce resource? [closed]

Actually I want to know what does it mean by alternative uses of this two terms of economy.
6
votes
1answer
106 views

Is there any article or paper that describes what Thomas Sargent thinks of New Keynesian economics/models?

Is there any article or paper that describes what Thomas Sargent thinks of New Keynesian economics/models? I am asking this question, because we all know what Thomas Sargent thinks of Old Keynesian ...
6
votes
2answers
2k views

Is the economy a zero-sum game?

Theoretically speaking, if all the Earth's inhabitants were to save money and invest, is it possible for everybody to get, let's say, a 4% yearly return for everyone? Is the economy a zero sum game (...
3
votes
3answers
454 views

Literature Recommendation: Advanced Undergraduate Economics

I come from a strong quantitative background and am going to law school in the fall. I'm interested in financial product regulation and competition law. I have taken an introductory course in ...
10
votes
2answers
846 views

Simulating Real Business Cycle

Basically I need to replicate Hartley's 'A User's Guide to Solving Real Business Cycle Models' (http://www.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn235a/Linearization/ugfinal.pdf). Specifically, ...
2
votes
2answers
580 views

Why does entitlements leads to lower US productivity? [closed]

In a recent Bloomberg interview, Alan Greenspan suggested that entitlements leads to lower productivity, can you please explain it? What does 'capital stocks' mean? Does he means that because we ...
3
votes
2answers
310 views

Economic Impact of A Student Loan Bubble Popping?

A few pundits have been stating that we have a student loan bubble, and this bubble will pop, similar to housing. I'm struggling to imagine the economic impact of what this would look like if these ...
2
votes
0answers
70 views

Decreasing consumption prices and increasing housing prices

It's election time in my country. The government boasts a decrease of 5% in consumption prices thanks to removing regulations, while the opposition blames the government for an increase of 5% in ...
4
votes
3answers
228 views

Scaling Adjustment Costs

Take a cont. diff, convex and increasing cost function $c(X)$. Say you start with a stock $K$, and want to (dis)invest $I$. Many adjustment cost functions (for example, the first example on page 2 ...
2
votes
2answers
13k views

Deriving the golden-rule savings rate in a Solow Model

Consider an economy described by the per worker production function function: $$y = f(k) = 2k^\frac{1}{2}$$ and a depreciation rate $δ$ of $.05, 5%$. Considering what we know to be true of the ...
1
vote
1answer
671 views

What happens to effective consumption and capital in the Ramsey/Cass-Koopmans(RCK) model when technological growth decreases?

Is the conclusion that both decline correct? Both long and short run. Let $g_x$ denote growth rate of $x$, $g_c$ the growth rate of $\hat c$. In the model there is no depreciation so, $$ g_c = \frac ...
1
vote
1answer
55 views

State Level Unemployment Data

I thought that the St Louis FED was the ultimative resource for macro data, but even they don't appear to have a time series of state level unemployment numbers for the United States. Who does?
2
votes
1answer
260 views

Does the amount of inward investments affect inflation?

I understand that inflation has an impact on the foreign direct investment. But can the opposite be true? The amount of foreign direct investment has an impact on the inflation of the country that ...
3
votes
2answers
413 views

Understanding subscripts in first order conditions of dynamic optimization problems

Suppose we have a simple maximization problem as described in Equation 1.1 here or here. This leads us to the Lagrangian Equation 1.3: $$\begin{align*}\mathcal{L} &= \sum_{t=1}^\infty \beta^{t-1}\...
1
vote
1answer
2k views

What is considered a “final product” for gross domestic product?

Given a territory and a time range, the gross domestic product is the sum of all the values added. The term “value added” is open to interpretation. Since the value added of a product or service is ...
2
votes
2answers
327 views

Does risk aversion of utility function cause the existence of positive interest rate?

In standard macro model, it is usually time preference that causes positive interest rate. But is there anything to do with risk aversion of utility function that causes existence of positive interest ...
15
votes
2answers
767 views

Complete Markets in Continuous Time

In the standard discrete time economies with a finite number of states, $n$, a complete markets economy is simply an economy with $n$ independent assets (Think Ljunqvist and Sargent Chapter 8). This ...
4
votes
1answer
413 views

Why does nation's total debt matter and not NIIP?

Most people in the media talk about how the total debt level of a nation relative to its GDP is a measure of how "screwed" the country is. For example, see this: http://www.zerohedge.com/news/goldmans-...
5
votes
1answer
59 views

Is Firing Costly in the US?

I suppose that it doesn't cost most firms much to get rid of cheap labor, and that high wage workers typically have contracts that imply high compensations in case of firing. But what about the ...
3
votes
1answer
159 views

Abenomics and the Japanese VAT tax hike

Abenomics seems to me like a straightforward and modern plan of economic reflation through monetary easing and some attempt at structural reform. While it's still early, it looks like many of the ...
7
votes
2answers
204 views

What is the usefulness of approximating an optimal decision rule that close enough to steadystate in RBC model?

I'm reading understanding real business cycle by Plosser. Here's my crude understanding: For a RBC model, the FOCs of lagrangian together with transversality condition usually forms a nonlinear ...
4
votes
1answer
110 views

What can we know for sure among ambiguous impulse responses in RBC?

I'm trying to understand the section on responses to productivity disturbances in Understanding Real Business Cycles by Plossor. It seems to me ambiguity of representative agent's response in ...
4
votes
2answers
173 views

What would be the defining characteristic of New-Keynsian thought?

If you had to summarize New-Keynsian thought into one paragraph, or a set of equations, what would it be?
0
votes
2answers
46 views

Do capital goods have to be valued so that (discounted) real expected return on capital goods equal current present value of capital goods?

Let $P_k$ be the value of 1 quantity of a capital good. If one does not sell the capital good and keep it, the good provides interests. In such a case, does standard macro say that all expected ...
11
votes
2answers
971 views

Inflation and economic growth

Noticeable works about the impact of inflation on economic growth are dated back to the 90s. For example, Barro (1995): the impact effects from an increase in average inflation by 10 percentage ...
2
votes
1answer
64 views

When estimating a basic macroeconomics model, why is goodness of fit with labor data not often dealt with?

So when dealing with not-too-complex RBC models or New Keynesian models, we often arrive with a few final reduced-form equations, and as far as I know, we use these equations to estimate the model. ...
9
votes
3answers
1k views

In log-linearized New Keynesian model, what do $Y$, $Y_t$, $y_t$ actually mean?

This may be a weird question, but I am unfortunately confused by terms. Let us suppose log-linearized New Keynesian model as suggested by Gali here: http://crei.cat/people/gali/pdf_files/monograph/...
3
votes
1answer
83 views

How to intuit a necessary optimality conidtion involving growth rate of Lagrange multiplier in Ramsey growth model?

I encountered a necessary optimality conidtion involving growth rate of Lagrange multiplier in this note on Ramsey model $$\frac{\dot \lambda}{\lambda} = \mathcal {v} - (f^\prime(k)-\delta-\xi)$$ in ...
3
votes
0answers
56 views

Help finding information for research [closed]

My partner and I are both undergrads. trying to complete an extracurricular research project and need to update parameters for our model. Our advisor is out of country and we have minimal/spotty ...
0
votes
0answers
58 views

Optimal taxation and substitute commodities

Reading Ramsey's paper: a contribution to the theory of taxation. It says that when we are dealing with rival goods we look if the tax that is going to be applied leave unchanged the proportions in ...
1
vote
0answers
40 views

Evidence of firm borrowing and loans

I'm absolutely not from firm financing and look to read up on the subject, but mostly onto empirical stuff. Standard questions would be: What is the ratio of firms that finance themselves with bank ...
2
votes
2answers
126 views

Does price affect quantity or vice versa?

On nearly all graphs found within economics textbooks, quantity is label on the x-axis and price on the y-axis, implying that the quantity supplied affects the price. Is this really so? Intuition ...
5
votes
6answers
2k views

Does the money's “Store of value” function actually exists?

I'm aware of the following four functions of money: Medium of exchange. Measure of value (in dollars, pounds, etc.) Standard for exchanging goods (guaranteed by the Fed) A Store of value (as an asset)...
2
votes
1answer
259 views

What impact did major fiscal policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?

What impact did fiscal policy actions taken during the Great Recession (2007-09) have on U.S. economic performance? Bush passed the Economic Stimulus Act of 2008 and also the Emergency Economic ...
3
votes
0answers
144 views

Kolmogorov-Forward-Equation with Entry and Exit

I'll try to ask this question in the most simplistic environment possible, so lets think about a household that can consume and save. After some cumbersome work, we have solved for the optimal savings ...
2
votes
0answers
60 views

Cyclicality of Markups

I'm looking for scholarly articles or summaries on the subject of markups. More importantly, for empirical evidence whether they're pro- or counter cyclical, and on theoretical papers on their ...
5
votes
1answer
402 views

Are profits procyclical?

This is somewhat related, but distinct from Cyclicality of Markups Basically, I'm looking for papers on whether firms profits are (on average) procyclical or not, and I appreciate theoretical, but ...
2
votes
1answer
59 views

Timeline of comprehensive NIPA revisions

I have been fruitlessly searching for a list of dates of comprehensive National Income and Product Account revisions. Clues I have found so far: The Bureau of Economic Analysis website says the 1999 ...
3
votes
0answers
39 views

Real time data map about the amount of a currency that are held in the world ?

Where can I see in real time data about the amount of a currency that is held in central banks (and maybe other significant places) ? A map would be great. I would like to know if there is an ...
0
votes
1answer
78 views

What would be the economic effects of a reduction in the general level of protectionism on the Australian economy?

Protectionism methods including: tariffs, subsidies, quotas, local contents rules and export incentives Would would be the effects of a reduction of these methods, not complete free trade.
5
votes
1answer
86 views

What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance?

What impact did monetary policy actions taken during the Great Recession (2007-09) have on U.S. economic performance? Quantitative easing and unconventional policy actions such as asset purchases and ...
5
votes
2answers
3k views

Relationship between the Lagrangian and consumption euler equation?

I think that the best way for me to ask my question would be to start with an example. Suppose that consumers have a two-period horizon and their instantaneous utility is: $\:$ $U(C_{t})=ln \: C_{t}...
3
votes
1answer
1k views

Basic microeconomics: supply, demand and substitutes in production

The question is: explain the change in the market for skim milk, if demand for ice cream rises. I'd say these two are unrelated in consumption (saying they're substitutes is kind of stretching it), ...
2
votes
1answer
54 views

Which macroeconomic issues can be considered “curable” and which can't?

I like the comparison between economics and medicine. Both study complex phenomena and both are limited in ways to run experiments (though medicine has much more freedom here). We all know medicine ...
4
votes
4answers
2k views

Books for microeconomics and macroeconomics for selected topics

I am a mathematics undergraduate trying to self-learn some economics. I have no background in economics. I wish to know from which chapters of Hal Varian's "Intermediate Microeconomics" (7th edition) ...
2
votes
0answers
261 views

What major fiscal policy actions were taken during the Great Recession (2007-09)?

What major fiscal policy actions were taken during the Great Recession (2007-2009)?
5
votes
2answers
161 views

Unlimited supply of national currency?

I was reading this article about Denmark central bank defending its currency peg: http://www.bloomberg.com/news/2015-01-22/denmark-cuts-key-deposit-rate-to-minus-0-35-to-drive-down-krone.html In it ...
3
votes
1answer
123 views

How can I solve for total money spent if I use a non-constant MPC?

Background Today in my macroeconomics class my teacher taught us three concepts. The first is very simple: consumption $c$ is a linear function of national income $y$. Mathematically, $$c = My + b$$...