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
0answers
34 views

In a rational expectation framework, do all agents know the true law of motion of the economy?

Expectations are model consistent, on average, in a RE framework, so errors are made, but on average they are zero. thus In a rational expectation framework, do all agents know the true law of ...
1
vote
1answer
37 views

What would be the “text-book” result of governement taking on massive debt immediately before a significant recession [closed]

Supposing, (entirely hypothetically, of course ;) ), that the UK government had taken on massive future debts (by spontaneously giving 2-3% of GDP to its citizens, in GBP, say.) immediately before a ...
1
vote
0answers
11 views

Does the law of motion remain constant in a rational expectation model? Does it constantly change in a boundedly rational agent framework?

Is the following true? The rational expectations hypothesis also implicitly assumes that the law of motion of the economy does not change, which actually is a self-fulfilling assumption as long as ...
1
vote
1answer
55 views

How does the GDP multiplier work?

When we learn about the GDP multiplier, it is portrayed as 1/MPS, because savings are supposedly a leak out of consumer spending. However, what I don't understand is aren't those savings spent anyways ...
2
votes
0answers
31 views

Does the federal reserve create any type of deadweight/welfare loss?

In microeconomics, we learn that when a good is overproduced or under produced, there is a dead weight loss associated with it. It seems like the same concept would apply to macroeconomics, where the ...
0
votes
1answer
35 views

Why does a model that is used for policy analysis needs its shocks and parameters to be structural (= invariant) to the shock under consideration?

In their paper, " New Keynesian Models: Not Yet Useful for Policy Analysis" V. V. Chari, Patrick J. Kehoe, and Ellen R. McGrattan argue that one needs a structural model in order to analyse the ...
1
vote
1answer
61 views

What is the relationship between population growth and economic growth?

Population Growth is only one of several factors of influence on economic growth but it is not strictly necessary for the economy to grow. I have also heard of the term called the population bonus - ...
0
votes
1answer
50 views

Are overlapping generation (OLG) models extensions of a DSGE model?

Are overlapping generation models (OLG) extensions of a dynamic stochastic general equilibrium (DSGE) model? Or aren't these DSGE per se?
-1
votes
2answers
40 views

Does demand side economics only apply to manufacturing

For example, if investment falls then manufacturing falls. but there is no investment in secondary markets. Wouldn't recessions cause factories to collapse but why would they affect realtors, used ...
2
votes
1answer
82 views

Research question formation

I am in the process of starting a research paper (for those in the IB Board, this is the Extended Essay) and I had previously formed my research question like this: To what extent will factor x ...
2
votes
0answers
20 views

Reference for Jacob Viner research on colonies

In this video at 6.02 Milton Friedman mentions some 'famous studies' on colonies from Jacob Viner. Does someone know exactly which studies these are?
1
vote
1answer
42 views

Oil prices forecast methods

Oil prices have a significant impact on the world economy, positive for exporters and negative for importers to oversimplify a bit. They are also known to be highly volatile, and depend on hard to ...
0
votes
1answer
28 views

Choice of measure for unemployment

There are six types of unemployment rates in the US (U1-U6). U6 provides the broadest measure of unemployment, taking into account not only the unemployed labour market participants who are actively ...
1
vote
0answers
43 views

Why Does Deficit Spending Work Without a Liquidity Trap?

My understanding is that in a functioning economy, the financial market clears when the nominal interest rate is above zero. It is only when it reaches zero that a liquidity trap occurs and the ...
1
vote
0answers
68 views

Why does real wage equal MPL * L

My macroeconomics book(Mankiw 7th ed.) states the following: Economic Profit = Y − (MPL × L) − (MPK × K ). It also states that the (economic) profit of a firm equals the output minus the total real ...
0
votes
1answer
25 views

Why does the aggregate consumer spending decrease due to to lower expected future disposable income instead of MPC?

This illustration is from Krugman's macroeconomics textbook, it's supposed to illustrate following situation (assuming that it happened for many people): Conversely, suppose you have a good job but ...
1
vote
0answers
26 views

How can the Fed realistically address the issue of frontrunning (in the context of its ETF purchases)

In the first two days in which the Fed's corporate bond program started buying ETFs, purchases totaled around USD305m. The size of the program is much larger, and it would seem very reasonable to ...
0
votes
2answers
35 views

Regarding the role of the Fed in controlling interest rates

When it is said that the Fed cut interest rates, does this refer to the discount rate, fed fund rate or both?
3
votes
0answers
24 views

Impacts of Suspending Mortgage and Rent Payments

Recently, there has been some support for suspending rent and mortgage payments, the goal being to provide financial relief during the Covid-19 response. I'm wondering what the impacts for the ...
2
votes
1answer
41 views

Is there unnecessary duplication for borrowing in this circular flow of income diagram?

Here is a circular flow of income that I took from Krugman's macroenomics textbook. We can see that when firms want to borrow they can go to the financial sector and borrow savings of national and ...
1
vote
0answers
11 views

Successes and limitations of New Keynesian DSGE models?

What are some good review papers that discuss the successes and limitations of current state of the art (New Keynesian) DSGE models assuming rational expectations? Probably some of these reviews can ...
1
vote
1answer
20 views

Terminology: _______ financing (meaning financed through the private sector)

I have encountered several similar terms on this notion, including: private sector financing (very clear, but a bit wordy) market financing (somewhat clear, usage seems infrequent) alternative ...
1
vote
0answers
33 views

What does the economic collapse of a country mean and what are its consequences?

I live in Iran, a country that has been under sanctions since 1979. After the US sanctions on Iranian oil, everything got worse and the price of everything increased four times in just three months. ...
6
votes
1answer
121 views

Why doesn't the ECB implement the same fiscal and monetary policy that the FED used to save the US economy?

If the Fed managed to save the US economy with their liberal expansionary policy, why doesn't the ECB follow suit if it is much more efficient in reducing unemployment etc? Also, why did ...
0
votes
1answer
28 views

Nominal and real government expenditure

I just need to know that how to make a data series of real government expenditures using nominal government expenditure data series.
1
vote
2answers
29 views

How is GDP counted between different countries?

Sorry if this question is dumb, but I did not manage to find the answer on the web. The questions is as follows: As far as I understand, GDP is the total value of a country's production. It includes ...
6
votes
2answers
141 views

Who regulates the balancing of the books for commercial banks? How? 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 ...
0
votes
0answers
49 views

How to interpret correctly the uncovered interest rate parity condition

So, according to my macroeconomics professor's notes, the UNCOVERED INTEREST RATE PARITY CONDITION is defined this way : Now, i don't quite grasp the concept of the 'expected appreciation rate of ...
1
vote
1answer
227 views

How can austerity and quantitative easing happen simultaneously?

In 2010 the UK government simultaneously started an austerity program which cut public spending, taking money out of the economy, while enacting a quantitative easing program which injected hundreds ...
0
votes
1answer
19 views

Where to find series of capital-output ratio for the US?

While the capital-output ratio is widely used in Macroeconomics as a target in calibration, it is usually just set to be equal to 3, without specifying the data source nor the methodology used to ...
0
votes
0answers
148 views

How does locking down a country cause its economy to suffer?

As of time of writing, many countries have been in lockdown for weeks or months, and the economic data coming out of that is usually quite grim. I'm wondering how being in lockdown relates to poor ...
6
votes
1answer
997 views

What are the consequences of deflation in Japan?

Most of the literature I can find about deflation in Japan takes for granted that deflation is bad for the country. I can also find a lot of literature on why deflation is bad in theory. Is there any ...
0
votes
1answer
30 views

How yield rates influence the “cost of borrowing” for borrowers

I am currently learning about quantitative easing, and I am having trouble understanding yield rates and how that influences the "cost of borrowing". This is the resource I am using. The lecturer ...
4
votes
1answer
254 views

Why does falling global bond yields signal coming deflation?

This article suggests that, "Bond markets are signalling something very nasty coming down the road at us – an all encompassing, worldwide deflation. " I cannot understand why bond yields falling ...
0
votes
1answer
196 views

Why do expectations of inflation decrease SRAS (Short Run Aggregate supply)?

If firms and workers expect the prices to rise, the short run aggregate supply will shift to the left to SRAS2. (https://www.albert.io/blog/what-shifts-aggregate-demand-and-supply-ap-macroeconomics-...
2
votes
1answer
250 views

Dynamic Market Equilibrium: motivation for differential equations

I came across this discussion, claiming supply and demand are expressible in terms of its price as $$Q_s=c_1+w_1P+u_1P'+v_1P'',\,Q_d=c_2+w_2P+u_2P'+v_2P''.$$Equating supply to demand for an ...
3
votes
3answers
718 views

Why is national debt bad if the central bank can keep buying bonds?

When I read about national debt, it's usually about how debt is bad because with too much debt, debtors would demand higher interest rates. Eventually the government can't pay the interest, defaults, ...
2
votes
2answers
449 views

How did the Plaza Accord revalue the Japanese Yen?

In September 1985, Japan, the US, and three other nations agreed to the "Plaza Accord," which appreciated the Yen and Deutsche Mark. The value of the Japanese Yen appreciated from 200 Yen per Dollar ...
9
votes
3answers
515 views

Why is the rouble collapsing?

What are the reasons why the rouble (RUB) is collapsing? Which one is the main one?
0
votes
0answers
21 views

Governmental debt after COVID

Is there any well-researched studies published about the effect of increased governmental spending and later deepening debt burden due to COVID? Appreciate that the event is quite recent, but being ...
5
votes
4answers
400 views

What is an economic crisis?

I'm not sure if this is a silly question or overly semantic but I think the term "Crisis" is misunderstood (or at least misunderstood by myself). There are a number of ways the term is used, namely: ...
0
votes
0answers
21 views

Calculating real wage in the previous year?

If in the base year the real wage is $.489, inflation in previous year was 5.8% and total wage growth was 13.5%, what was the real wage one year ago? I know at the base nominal wage = real wage. Thus,...
0
votes
1answer
47 views

Universal basic loan

I'm looking for feedback and critiques of an idea. Universal basic income is an increasingly popular idea, but most agree that it would be terrifically expensive. Assuming that the goal of UBI is to ...
2
votes
1answer
125 views

Why will Australia increase its interest rate only after the US increases its interest rate?

According to this article, Australia will increase its interest rate only when the US increases its interest rate. The Aussie dollar (AUD) keeps going down, which is not very good for importing ...
0
votes
1answer
53 views

Greek Debt Crisis

If the Greek government defaults on its bonds issued by French and German investment banks, how does that prevent the French and German governments from paying back the money that they owe to ...
0
votes
2answers
124 views

German economic growth in the 20th century

Regarding this great animation: Animation: The World’s 10 Largest Economies by GDP (1960-Today) I have the following questions: Why did Germany's GDP shrink so much from 1995 to 2000, while the GDP ...
8
votes
2answers
613 views

What benefits do OPEC countries obtain by cutting oil supply?

It is unclear to a economic novice like me why OPEC is not cutting down production and raising oil prices. I have read several journalists commenting upon this on the internet but perhaps an economist ...
2
votes
3answers
175 views

Russian ruble drop in value due to low oil prices

http://www.americanactionforum.org/research/impact-falling-oil-prices-russian-financing/ Based on the above article, the author states that "For budgeting, this favors the oil exporter, because a ...
0
votes
0answers
33 views

Macroeconomics: Arbitrage equation and the price of stock

If the bank real interest rate is 2 percent, the percent gain in physical capital gain is 2 percent, the marginal product of capital is 3 percent, and the percent dividend return is 5 percent, what is ...
2
votes
1answer
96 views

Derivation of the elasticity of substitution of a general production function with labor-augmenting technological progress

I am following and trying to fully understand a famous and interesting work of Bentolila and Saint-paul (2003). They try to explain movements of the factor's share in terms of a relationship between ...

1
5 6
7
8 9
43