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
1
vote
1answer
28 views

Why does equity have historically poor performance after rate cuts?

I am struggling to understand why equity markets seem to suffer shortly after fed rate cuts. Here is a rather telling chart: Question Assuming not some kind of spurious relationship, what's the ...
1
vote
1answer
48 views

Why doesn't Aggregate Demand mean National Income whereas Aggregate supply is equal to national income?

Aggregate Demand is Basically $$ AD = C + I + G + X - M $$ Is not this national income Through Expenditure Method ? Then why don't we treat AD equal to National Income ?
1
vote
0answers
14 views

Useful models/theory private debt and borrowed constrained households

In macro oriented research papers the role of private debt is discussed and that apparently when there is a lot of private debt in the economy, households tend to be borrowed constrained.. Could ...
0
votes
0answers
13 views

CPI and real quantities

How is it real wages = old wages * new cpi / old cpi? It seems this discounts back to the reference period and then multiplies out to current day. This would give us new (nominal) wages?
0
votes
0answers
18 views

List of countries moved to developed economies in the last 50 years

I read in Bloomberg that five countries moved to advanced economies in the last 50 years from developing economies and one of them was Singapore. Wondering what are the other four countries? The ...
3
votes
0answers
55 views

Log-linearizing a non-separable utility function around the steady state

I've started reading Jordi Galí's Monetary Policy, Inflation and the Business Cycle (2nd ed., 2015). In section 2.5.2, Galí considers an example with the following non-separable period utility ...
0
votes
0answers
9 views

why data for PPP conversion rates are given annually?

i try to find quarterly ppp rates for currencies to compare actual exchange rates from PPP levels, but all of data is annual? why?
1
vote
0answers
23 views

What are some similarities and differences between the 2001 recession and the 2007 recession in terms of causes and the effects on the economy? [closed]

I know the two were caused by the burst bubbles and worsened by rising interest rates. I also know that the the 2001 recession had a long jobless recovery but did not experience as many bank failures ...
1
vote
3answers
70 views

How can a consumer economy possibly be sustainable?

Some consumer economies In 2017, the United States household final consumption expenditure (HFCE) is $13t, which is 68% of its GDP. In 2017, the United Kingdom has a HFCE of 1.7t, which is 66% of its ...
0
votes
2answers
95 views

Log linearising (Gali textbook)

In Gali (2015)'s textbook Monetary Policy, Inflation, and the Business Cycle, variables in levels are denoted with capital letters, logged variables with lowercase letters. However, when a log-...
3
votes
1answer
6k views

What is the Credit-to-GDP gap exactly?

I have been hearing a lot about this metric in relation to rising fears of a Chinese financial crisis. I am wondering, what exactly does this mean? I am told it refers to the difference between ...
0
votes
0answers
13 views

How does investment lead to generation of jobs?

I quote from India's Economic Survey 2019 (an official document) - While the claim is often made that investment displaces jobs, this remains true only when viewed within the silo of a specific ...
1
vote
2answers
76 views

Confused about what is meant by adjusting for inflation

In class, we have been using this calculator in order to see the effects of inflation. https://www.rbnz.govt.nz/monetary-policy/inflation-calculator I am slightly confused by what is meant by "...
6
votes
1answer
93 views

Why is macroeconomics studied through “Shocks”?

"Why is modern macroeconomics all about identifying this shock and that shock?" Coming from a theoretical econometrics background, I have recently delved into empirical macro literature. I am a bit ...
1
vote
1answer
58 views

What is the interpration of results if adding or subtracting a control variable effects the significance of explanotary variables?

I am conducting some regressions on economic growth determinants and I am disillusioned. Essentially by choosing what groups of variable to regress I can get the desired significance. What does this ...
0
votes
0answers
20 views

How the Balassa-Samuelson affect real exchange rate?

According to standard Balassa-Samuelson effect, when the productivity increases in the tradable sector (GDP), price increase can be observed in non-tradable sector and this can lead to appreciation of ...
2
votes
1answer
56 views

CES v. Leontief Aggregator in Production

Consider a production process with two distinct capital types such that there is a capital aggregator. You could view $k_v$ as a more versatile capital (e.g. can be converted into many different ...
0
votes
1answer
34 views

what is the Relationship between Zero nominal interest rates and liquidity traps

So I'm reading mankiw"s principles of economics and I'm in the chapter about the influence of monetary and fiscal policy on Aggregate demamd. The part about nominal Interest rates and liquidity traps ...
6
votes
1answer
305 views

How is monetary policy sustainable, or even fair, in the current economy? [closed]

I've just read Money Creation in the Modern Economy, an article published by the Bank of England. I'm trying to wrap my head around this from multiple points of view, since it brings about a lot of ...
0
votes
0answers
24 views

When Balassa-Samuelson effect increases, real exchange rate depreciate?

I researched several literatures related with Balassa-Samuelson effect and according to literatures, as Balassa samuelson effect increases, real exchange rate appreciates. However according to the ...
0
votes
0answers
11 views

If PPP Exchange rate is 0.291, what does that mean?

I've normalised deflators for countries A and B. If the Price level of Country A/ Price level of country B = .291, does that mean that on average for every dollar a person in Country B spends, for the ...
0
votes
1answer
37 views

Having a lower inflation rate is not the same as having lower overall prices?

Having a lower inflation rate is not the same as having lower overall prices.Why? lower CPI(inflation) means price levels in country decreases?
0
votes
0answers
30 views

How to calculate PPP Exchange Rate using GDP deflator?

I'm doing a project and I'm asked to find Purchasing Power Parity exchange rate. The way the teacher says to do it is to divide my countries GDP deflator by the US GDP deflator over a time series. Is ...
0
votes
1answer
17 views

If I find the GDP deflator (i.e., price level) for a given time series, can I then find real consumption given nominal consumption?

I've found the gdp deflator for a country over a 25 year span. If I have nominal consumption for the same time series, then I just have to divide nominal consumption by the p-level I found with the ...
2
votes
2answers
49 views

How to deal with misspecification of models in Macroeconomics?

I'm wondering what methods are used in economics, specially in macro, to deal with model misspecification. I've already searched the web, but I may be missing some methods. Therefore, I ask you for ...
0
votes
0answers
19 views

Does anyone know how to find disposable income data? [duplicate]

I'm doing a macro project and I need to find disposable income data over a 25 year period. My professor said that this metric data is available directly on the World Bank website. I've searched ...
0
votes
0answers
26 views

How to Find Real Disposable Income for Iran?

I'm doing a project for my macro course, and I'm trying to find real disposable income for Iran over a 25 year period. In my course Disposable income, $Y_d = Y - T$, where $Y$ is output (income) and $...
0
votes
1answer
25 views

Market Clearing with Dividend and Investment

In pure exchange GE models, a typical goods market clearing condition for good $n$ looks like: $$\sum\limits_{i=1}^Ic_n^i=\sum\limits_{i=1}^Ie_n^i.$$ Consider a model with production where firms can ...
0
votes
1answer
39 views

Would it be accurate to say that the economies of most of the countries are capitalistic?

What is the proportion of countries that are capitalistic? What is the proportion of the planet's population who live in such countries? How is this, (somewhat subjective?)
1
vote
0answers
39 views

The rationale for using a lagged variable to address endogeneity arising from simultaneous causation?

when there is simultaneous causation between dependent and independent variables often in papers we see a lagged variable being used in place of contemporaneous variable. For example, Clemens, ...
2
votes
1answer
34 views

Meaning of assumptions regarding continuum of agents in economics models

I am reading an economics paper which contains a model with households and banks. In the model, banks are owned by households. The authors make this assumption when they discuss households (section 2....
1
vote
2answers
103 views

Is it possible, that the global warming will affect the growth of the economy?

I am wondering if, in the face of the global warming, the long-term passive investments into ETFs are still a good idea. Right know we benefit from the growth of the economy. I assume (maybe that's ...
0
votes
0answers
30 views

how Ballassa Samuelson affects real exchange rate? [duplicate]

I get confused. How "Balassa Samuelson effect" influences real exchange rate?
0
votes
1answer
57 views

rental cost of capital

I am estimating time series for rental price of capital using Hall-Jorgenson method: $$r=\frac{P_k}{P}(i-inf+\delta)$$ here, $r$ is the rental cost of capital, $P_k$ is the price of capital goods (...
4
votes
3answers
80 views

Difference between shocks, innovations and disturbances

In macroeconomics and macroeconomic models, shocks, innovations, and disturbances are very prominent and often mentioned in the literature. In general, is there a difference between macroeconomic ...
1
vote
0answers
32 views

Proving the existence of a steady state

I am trying to prove the existence of at least one stable steady state in a situation where I am given properties of the production function but not an explicit functional form. I have the following (...
-1
votes
1answer
30 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 ...
1
vote
3answers
187 views

Is poverty a mathematical necessity?

I recently saw a meme, and the content was something like: In the near future, a meteor will 'hit' the Earth, and there will be gold rain, and hence everyone will be rich The ridiculous thing ...
-2
votes
1answer
18 views

Each short-run average cost curve

Each short-run average cost curve A. never touches the long-run curve B. always crosses the long-run curve C. always lies above all the points on the long-run curve D. coincides with the long-run ...
2
votes
1answer
42 views

Have I found the correct Emission Price

Let's say that there is a hotel owner $(H)$ and a woodworker $(W)$ working in close proximity to one another. The woodworker produces $x$ units to sell at market at $p_{x}=6,5$. From the woodworking ...
0
votes
1answer
218 views

Why does capital flight cause inflation?

Context: I was watching a video about Venezuela, and, it all started with capital flight due to poor confidence in the government. The government tried to stop it, and in the process it created a ...
-1
votes
1answer
45 views

Why has gold dropped during the same week as Deutches Bank faces great difficulties

I chose the phrasing "great difficulties" to be polite. The "capital release unit" seems to be a bit of a desperate action from the bank, coupled with further complications involving bad press made ...
2
votes
1answer
85 views

How much better off would the average person be if we took away enough money from the top 1% to make them no richer than the average person?

In my hypothetical situation, the USA population takes enough money away from the top 1% so that they are no richer than the average person. That money is then redistributed to the lower and middle ...
-1
votes
2answers
54 views

How does real gdp affect the domestic currency?

When the domestic real gdp per capita increases then it has a negative effect on domestic currency (depreciation)? Why? Source: The real exchange rate of euro and Greek economic growth, Gregory T. ...
-3
votes
1answer
41 views

Why did no US politician start the trade war a decade earlier with China or possibly the Globe if it is a good thing to do? [closed]

Why did no US politician start the trade war with China (or possibly the Globe) a decade earlier if it is a good thing to do? I am asking for a list of reasons for why not.
1
vote
1answer
108 views

What are some applications of Real Analysis in Graduate Economics?

I am interested as to what areas of masters/PhD coursework that learning the fundamentals of Real Analysis would be beneficial for? I am aware of its applications in Econometrics proofs and analysis, ...
2
votes
1answer
84 views

Dixit Stiglitz price index FOC?

In the solution to the problem below provided by my professor he applies a first order condition to the lagrangian for ct, getting pt for the partial derivative of the argument "$\frac{d}{dc_t(t)} \...
1
vote
1answer
33 views

How to calculate the spending multiplier from a given set of equations?

So i have this question: I go along and get Then i need to calculate the effect on the optimal output is G increases by 80: And on the answer sheet it states that the spending multiplier is: From ...
3
votes
3answers
329 views

Cobb-Douglas production function, given $w$ get $r$ regardless of input levels. Why?

There is a market economy with technology given by: $$Y = K^\alpha L^{1-\alpha} \tag{1}$$ Firms behave competitively and input prices are: $$r = \alpha K^{\alpha-1}L^{1-\alpha} = \alpha(\frac{L}{K})...