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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HANK model lecture notes + code

Can someone recommand me good lecture notes to understand macroeconomic heterogenous agent models such as HANK models (not TANK models, I know how them). Also if you know where I could find some codes ...
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Why is there such a big difference of purchasing power toward Coca-Cola between Euro in France and USD in USA, comparing to Big-Mac?

I have an assignment that requires me to pick an item and use it to create my own price level index, similar to Big-Mac index. In March 2021, the price of 0.5 litre Coca-Cola in France was 0.97 Euro ...
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Tauchen Hussey Process in Words

I've encountered the Tauchen-Hussey Process for discretizing an AR(1) a few times in homework, but never with an in-depth explanation as to what it actually does or how it works ... just "here's ...
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What are claims on a central government?

I downloaded some data from the World Bank's World Development Indicators database. I found a time series called Claims on central government, etc (% of GDP) with code ...
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How to Measure foreign Aid dependency

I am writing a paper regarding foreign aid dependency, and I would like to classify countries as being aid dependent or independent. Is there any criteria in the literature that can be used to ...
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1answer
41 views

Is normative economic planning value-neutral or value-based?

I'm really confused with the meaning of the terms 'normative planning' and 'system planning'. Investopedia says "normative economics is subjective and value-based". On the other hand, many ...
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2answers
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A Simple Question about Labor Capital Ratios

I do not have much training in macroeconomics, so I want to know if this statement is accurate: "A \$30M dollar decrease in lending to businesses leads to a $45M decrease in aggregate labor ...
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The Simple Math of Aggregation on Idiosyncratic Shocks

I am reading some lecture notes on heterogenous agents and Negishi approach. The question I have is a very simple math problem under this background. The setting is following: (I omit the irrelevant ...
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1answer
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Finding the set of Pareto Optimal Allocations

I am asked to find the set of Pareto Optimal Allocations in an economy where there are two agents namely $1$ and $2$, with the following utility functions and endowments. $$u_1({x_1}^1,{x_2}^2)= \beta ...
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Question on notation

I need to write a couple of simple equations for a homework project. I wonder what the convention is with subscripts. I do not want to use Greek letters and keep it simple. I have a few variables such ...
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Quarterly GDP and government spending data sources

I am looking for quarterly government spending and GDP data between the years 2019 and 2020 for as many countries as possible. I am posting this question in hopes that someone will point me in the ...
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1answer
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No statistical significance of the TFP growth

I'm conducting an econometric analysis of the natural rate of interest in the euro-area countries using the following variables: as dependent variable I'm using the long term nominal interest rates (i....
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What is the appropriate interpretation of the impact of an aging demographic on the supply of credit?

In the case of Japan, one of the more prominent examples of an aging society, loan growth has slowed at what appears to be a consistent rate with its declining workforce. However the US appears to be ...
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Historical classification of countries data

I am looking for historical classification of countries by year as industrialized, Less Developed, and Emerging Market Countries and/or any other classification. I have looked on the World Bank ...
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1answer
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Help to understand a Log-linearization and subsequent Differentiation with respect to time

I was reading the following paper: https://www.jstor.org/stable/2999442?seq=1#metadata_info_tab_contents At one point there are a couple of simple passages that however I did not fully understand. In ...
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1answer
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What does "mass" mean in a Macroeconomic model?

A Solow model problem I am trying to solve asks me to assume that the economy consists of identical agents of mass 1. I have never heard of this term before, what does this mean?
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Why is nominal GDP deflated to get real GDP?

I am confused at the explanation below which explains why nominal GDP must be deflated to get real GDP. I thought the GDP deflator would decrease if prices are declining, so how does this result in ...
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Recursive Macroeconomics - Practice Questions

I am looking for practice questions on recursive macroeconomics that focus on the following: Defining Competitive equilibriums (Arrow Debreu, Sequential Market, Recursive Competitive) for different ...
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1answer
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Cholesky Identification in Structural VAR

Can you suggest me a framework in macroeconomics or finance where identification of a Structural VAR model through Cholesky ordering is still considered credible (in your opinion)? I'm looking for a ...
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Debt cycle theory of Ray Dalio

I recently started reading Ray Dalio's book regarding BIG DEBT CRISES. He compared there, economy to the monopoly board game. There is something I don't quite follow in this analogy. If you ...
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Does the ECB provide a daily Inflation Expectations series for the Euro area?

I've been searching for market indicators for Inflation Expectations. The FED provides at least two, one of those being the T5YIFR from the FRED database. Regarding the ECB I couldn't find anything... ...
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What is liquidity overhang?

I read in an economics article the following: RBI Governor has decided to keep the unwinding of monetary policy gradual, calibrated, and non-disruptive while remaining supportive of the economic ...
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1answer
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Expected payoff calculation difficulty in the Bayesian environment of Bergemman and Morris

Suppose that we have two states of the world equally likely to occur, and say $\psi$ is the common prior of the state $\theta\in\Theta=\{G,B\}$. The types of the players are given by the following ...
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1answer
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How to deflate data from PPI

I have producer price index data. I have 4 products almond walnut pecan and peanuts, two of them start from 1991 almond and walnut (base year) another two from 1982 pecan and peanut. Does anyone know ...
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1answer
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What are the major flaws of the RBC model and how does the New Keynesian model address them?

Looking for a generic answer to this question and potentially literature etc. that will help me study this question. Thanks in advance.
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Lagrangian in Ramsey model

I struggle to write and solve Lagrangian in the Ramsey model. I have the following individual preferences with a budget constraint: and an additional constraint that is a no-ponzi condition: How to ...
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Price levels falling due to decrease in aggregate demand

I know that a shift rightwards in aggregate demand would cause an inflationary gap according to the New Classical model. It would cause price levels to rise and prices of factors of production to ...
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Say's law of markets: theory and empirics

Good morning everyone, since I've just finished to read the book "A Treatise on Political Economy" by the french economist J.B. Say and since I've read about his famous "law of markets&...
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Approximation around steady state calculation

Define $\ln\frac{c_t}{c}=\hat{c_t}$ which means % deviation from steady state. Then $\frac{1}{c_t +\alpha g_t}=\lambda_t$ is equivalent as $\frac{1}{c e^{\hat{c_t}} + \alpha g e^{\hat{g_t}}}=\lambda e^...
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1answer
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Macroeconomics Question - GDP & GNP

If I, a citizen from South Korea, borrow $100000 from a Japanese bank to fund my purchase of a new Mercedes in the US, I'll be contributing to the GDP of US. However, will I be contributing to the GNP ...
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1answer
37 views

Simple taylor approximation in macroeconomic model

Define $\hat{y}=\log\frac{y_t}{y}$ which means percentage deviation from steady state. Then $\hat{y}=s_c \hat{c}+s_i \hat{i} + s_g \hat{g}$ where $s_c +s_i +s_g =1$. I can't derive that result. Is ...
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Price rigidity and demand-constrained economies

In this note, http://web.mit.edu/krugman/www/MINIMAC.html, Krugman develops a simple model to introduce the idea that whenever an economy experiences price rigidity then this economy is demand-...
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Keynesian-classical synthesis

The trouble with classical interest theory, said keynes was that it assumed the fixity of the key economic variable the level of employment was assumed fixed at full employment.. How this assumption ...
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Closed form solution to consumption-saving model in discrete time

Consider the simplest consumption-savings model of the following form: $$ \max_{\{c_t,a_{t+1}\}_t}\mathbb{E_0}\sum_{t\geq 0} \beta^tu(c_t) \\ a_{t+1} + c_t = (1+r)a_t + y_t \\ y_t \mid y_{t-1} \sim F $...
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1answer
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Derivation of Solow Growth Model (Solow, 1956)

In Solow's "A Contribution to the Theory of Economic Growth" paper, how do we go from this equation to such that Could you please give me a hint about that derivation?
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Saving equals to investment [closed]

How saving equals to investment only in equilibrium? I'm confused see attached pic Nd please tell me does it can be true in general too
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The share of the labor force in GDP (including wages and transfers to social protection, %) [closed]

What do the countries with the highest value for this indicator have in common (the share of labor in GDP, including wages and transfers for social protection, %) ? Conversely, what do the countries ...
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1answer
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What does it mean to detrend a time series at a given rate?

What does it mean to detrend a time series at a given rate, say, 1.5%? What is the formula here? $X_t - trend$? where trend = average growth rate? Say $X_t - 0.015$?
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1answer
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Does money hidden in "Moneyland" (offshore etc) get included in money supply and savings ratio statistics?

The recent Pandora Papers fuss has prompted me to ask a question that has been on my mind for a while. Does money hidden in offshore trusts, nominee companies and the various other Moneyland ...
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In the RBC model, why is household's problem dynamic?

Why is capital assumed to be a good accumulated in the current period t but being used in t+1? I think my interpretation is wrong here. I understand that households problem is dynamic because of this ...
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Appropriate way to estimate Nelson Siegel model in R

I want to estimate the Nelson Siegel parameters of daily WTI Crude Oil Futures Term Structure. It consists of 12 contracts with maturity of approximately 1-12 months. I have 2 datasets. The first one ...
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1answer
84 views

Log Linearising CES demand

I have been trying to log-linearise the demand function that follows from a standard two-good CES-utility maximamalisation problem. That is: Maximise \begin{eqnarray} U(h,c)= \left(G_1^{\rho}+ G_2^{\...
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1answer
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Solow model response function

Consider a Solow model without technological progress so that the steady state $k^*$ occurs at $sf(k^*) = (n+\delta)k^*$ where $n$ is population growth rate, $\delta$ is capital depreciation rate and $...
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How to draw a diagram like Solow model to prove growth rate in Harrod-Domar model won't converge?

Solow model defines income per capita function f(k)=F(K/L,1) with f'(k)>0 and f''(k)<0 and proves that there must be an intersection with (gL+gA+δ)k where growth rate converges. But it confuses ...
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1answer
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How could you partition Household Food Expenditures into Producing Industries?

From the 2019 Consumer Expenditure Survey, the average household annual food expenditure was $8,169 for that year. There are subcategories such as "Food at Home" and "Food away from ...
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35 views

Is economics zero sum game in spite of climate change? [duplicate]

Governments show so little cooperation in achieving net zero emissions, it makes me think that economic activity is zero or negative sum game when environmental limitations are considered. Is that ...
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1answer
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How is the United States net foreign wealth affected by a depreciation of the US Dollar?

My thought here is that if the dollar were to depreciate, then the value of US liabilities would decrease while the value of their assets would increase. Moreover, the US trade balance would become ...
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Data on failed entry over the past couple of decades

I was wondering whether anyone could point me towards a good starting point in order to gather facts about firm entry (esp. failed entry) over time. A perfunctory google research session has left me ...
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What are the macroeconomic options available to China for resolving the Evergrande bubble?

Partly inspired by this Noah Smith article. I was talking with a friend and we were trying to itemize what options might be available to the Chinese government to resolve the collapse of Evergrande. ...
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Equilibrium in an endowment economy

Consider an endowment economy with 2 agents with the same preferences defined by $\sum\beta^tlog\ c_t$ where Agent 1 has the following stream of endowments: $(w_0,w_1,w_2,w_3,...) = (2,1,2,1,...)$. ...

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