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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125 views

Bank Runs During the 1930s

Why were there numerous banks run right after the stock market crash of 1929? Why would a bank fail because the stock market crashes?
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Are there economic models that predict (only) a medium/long-term negative effect of protectionism?

Going by some ECB models/estimates from last year, protectionism would result in negative consequences pretty fast, e.g. For illustration, I will use the results of simulations carried out by ECB ...
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Query regarding derivation of aggregate demand curve

What is the difference between AD curve derive from is-lm model and quantity theory of money.
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Percentage/proportion of published papers with DSGE models

I remember reading a few years back an article that showed an interesting graphic with the percentage/proportion of published papers with DSGE models across time. I've tried searching, but I get so ...
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25 views

Balanced Growth Path Calculation

Consider an extension of Alesina - Rodrik paper 'Distributive politics and economic growth' (1994). Instead of wealth taxation, impose a labor income taxation with a slight change in the model ...
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What's the advantage of DSGE relative to BVARs?

DSGE models and BVARs are commonly used in academia and policy circles. They generate different performances (e.g., in forecasting) and perhaps serve different purposes. Notwithstanding, they have a ...
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Does migration exacerbate (albeit delay) the problem of aging, economically-inactive populations in Western societies?

As a layman, I've always understood that there is a general consensus amongst economists that "immigration is economically beneficial" to rich Western countries (like Britain) who have aging ...
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Profits and Aggregate Supply

I feel like this is quite a stupid question, but I can't wrap my head around it. Why do suppliers make less of a good as profits drop? Intuitively, shouldn't they make more of the good in order to ...
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27 views

Why does the bond market induce efficient allocation of capital?

Going from this quote by Bryan Collins of Fidelity on China's economy: One of the nice things we see from the development of a domestic bond market is that it starts the process of pricing ...
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How do treasury bill auction work?

So i am having a couple of issues understanding the auctions of treasury bills. I know that the treausury accepts the bids offering the highest price. The treausury accepts the competitive bids in ...
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How can I model the impacts of improved agriculture technologies and food aid in a multimarket model?

Given a multimarket model for staple agricultural commodities wheat, rice, maize and sorghum, in a low-income economy, Im trying to figure out how I can use the multimarket framework to look at the ...
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Neoclassical Economic Growth Model Shadow Price for Discrete vs Continuous Time

I recently learned about the neoclassical growth model in both discrete and continuous time. The intuitive meaning of the shadow price for both cases is that it represents the value of one additional ...
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What impact does deficit spending have on economic inequality?

Taxation schemes can be classified as progressive (the tax rate is higher for higher income brackets), regressive (the tax rate is lower for higher income brackets), or neutral (the tax rate is the ...
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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 ...
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55 views

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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1answer
57 views

What is the difference between a power law exponent and the Pareto exponent?

I use the poweRlaw package in R to fit a power law to my data. I am trying to figure out what is the value of the Pareto exponent. Assume the probability mass function is defined by: $$ p(x) = \...
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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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1answer
68 views

What are the benefits of UBI?

UBI - universal basic income (everyone gets a set amount per period) If you've heard anything about me, it's that there's an Asian man running for president that wants to give every American $...
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Does creating more jobs actually help the economy as a whole?

So I recently came across an interesting point on why NASA isn't a waste of money, and it basically stated how NASA supports thousands of jobs, creates community events, and uses a part of its budget ...
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Aggregate Demand

Today in class, we learned about aggregate demand. However, while I understand the shifters, I am an unable to understand what actual movement along the curve represents. Why doesn't a change in price ...
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Can we know what mainly caused the latest US manufacturing slump?

Reuters says (Oct 1, 2019): U.S. manufacturing activity tumbled to a more than 10-year low in September as lingering trade tensions weighed on exports, further heightening financial market fears of ...
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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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What strategies can the president employ to deflate the dollar

United States president Donald Trump has publicly declared a desire to deflate the value of the dollar. I have read in news reports that he has asked aids to find ways to decrease the dollar's ...
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How do major global events interact with debt cycles?

I recently watched Ray Dalio's video on how the economy runs on short/long term debt cycles. However I was wondering how other major events impact economic growth: How does the short and long term ...
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What happens to demand economics when rates are negative?

Keynesian economics assumes falling lending opportunity lowers profit. Under negative rates less lending actually means More Profit. So how does this change things?
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What accounts for the high GDP of the United States?

Wikipedia defines GDP as: Measure of the market value of all final goods and services produced in a period (quarterly or yearly) of time. So, I take it that the total value of all goods (and ...
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How interest rate affects currency

I am quite new to economics. I was reading about changes in interest rates and its effect on currency value. The fact is as interest rates increases, the currency value also increases and vice versa....
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Is there empirical evidence on usability of Cobb-Douglas production function?

This is my first question at Stack Exchange. I am trying to estimate simple Cobb-Douglas production function $Y=AL^{\alpha}K^{\beta}$ on US data and receive an unrealistic estimate of $\alpha$ and a ...
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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 the Euler Theorem. However, I wanted to know the return to scale of $y=f(1,k)$ (i.e. $Y$ divided by $AL$). I tried $z=p/AL$ , then $py=f(p,pk)$, differentiate w....
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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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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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Bretton Woods vs Gold Standard

I've been reading about the history of the IMF recently, and it strikes me as odd that despite the problems that arose with the gold standard (Germany in the 1920s, Fed cutting money supply during the ...
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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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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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Should Finland leave the eurozone?

Finland's economic recovery from the shock of the global financial crisis of 2007–2008 has been very weak. The country has been in recession for the past three years, with GDP expected to expand by ...
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Larry Summers on the causes of secular stagnation

In an influential speech on November 8, 2013 at the IMF Annual Research Conference, Larry Summers suggested that slow economic growth in the years following the 2007–2008 financial crisis might be due ...
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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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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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The economics of a “no deal” Brexit

A "no deal" Brexit is presented in negative terms. In such a scenario the UK would set tariff schedules in line with trade strategy and protect domestic industry/agriculture with tariff rate quotas. ...
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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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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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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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Was the 2008 financial crisis caused more by the US subprime mortgage lending or more by an international energy and oil pricing crisis?

I recently read The Big Short by Michael Lewis in which the depiction of the role of subprime mortgage lending in the US and then run away speculation on CDOs are shown to be the central and primary ...
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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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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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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 ...