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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2answers
582 views

on economic growth and Second Welfare theorem

While I was studying eighth edition of Mankiw's Macroeconomics, in chapter 9 on Economic Growth(pg. 245), the author mentions : "Some economists have proposed increasing the incentive to save by ...
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1answer
282 views

What is the difference between currency manipulation, and a fixed exchange rate regime?

China is labelled by some to be a 'currency manipulator', that is supposedly pegged to the US Dollar. What is the difference between currency manipulation and a fixed regime? Different motives? I ...
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1answer
120 views

Reasons for the recent rise in long-term unemployment

Kroft et al document the raise of long-term unemployed in the US during the recent crises. This is an impressive figure from their paper: They show that the raise does not come from compositional ...
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2answers
117 views

Chinese products: are we lowering our everyday life quality? [closed]

It's true that now we can purchase a whole load of useless stuff spending less than in the past, but is it really worth it? It feels like you buy something and the next day it's already broken. Is ...
2
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1answer
370 views

What would be the disadvantages of a TTIP?

Well the question kind of says it all, what I would like to know is,if a TTIP between America and EU is put in place even though not only Europe and America will benefit from it but also other ...
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2answers
211 views

Finding economy's factor price for perfect complement production function

Q.Consider an economy producing a single good by a production function $$Y = min [K, L]$$ where Y is the output of the final good. K and L are input use of capital and labour respectively. Suppose ...
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3answers
89 views

Books/Papers on Macroprudential Regulation

I am looking for some good introductory papers or possible books on macroprudential regulation.
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1answer
522 views

Financial investment in the composition of GDP

In the production function Y = C + I + G + NX Does foreign investment in domestic assets (i.e. foreign buying of domestic bonds) - and vice versa - come under the Net Exports variable? Which ...
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2answers
4k views

Investment = Saving relation in an open economy

I am reading the book Macroeconomics by Olivier Blanchard. It states that an alternative way of looking at an goods market equilibrium is investment = saving. In an open economy it states the ...
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Simple Neoclassical Growth Model with Elastic Labor and Non-Standard Capital Adjustment Costs

I have the following social planner problem to maximize $\{c_t, k_t, n_t \}$ $\begin{gather*}E_0 \sum_{t=0}^\infty \beta^t U(c_t, 1 - n_t), 0 < \beta < 1\end{gather*}$ subject to $\begin{...
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1answer
27 views

Data: Vacancies in the US before 2005

Shimer (2005) says These [separation shocks] introduce an almost perfectly positive correlation between unemployment and vacancies, an event that essentially never been observed in the United ...
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1answer
105 views

Equality, Taxes & Business Growth

First, I'm not an economist - just a regular Joe interested in a small part of the subject. Second, I apologize if this is a better question for the 'politics' stack exchange, but I figured I might ...
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How do I change the base year of real GDP using the GDP deflator and nominal GDP?

I'll use the US as an example. I have three data series nominal GDP $(Y)$ real GDP in 2005 USD $(\bar{Y})$ the GDP deflator $(d)$, with 2005 as the base year, so $d_{2005} = 100$ I want to change ...
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0answers
48 views

Separation shock and business cycles

In the context of the Diamonds-Mortensen-Pissarides models, there was a reasoning why a separation shock cannot fit business cycles. I think it was brought forward by Shimer, but I could be wrong. ...
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1answer
114 views

What are the widescale economic ramifications of people holding onto their money instead of spending it?

Pretty simple question: people get rich by saving more money than they spend. What are the implications of people holding onto their money instead of spending it? Do rich people save more money (...
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1answer
96 views

The most frequent causes of economic downfall?

In retrospect what are the major parameters, most frequently causing countries' economy to reduce its size and/or growth. Global Financial Crisis? Regional instability? Local Banking Sector failure? ...
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1answer
61 views

How to determine the worth of a good

I've searched around the web for awhile now and I'm beginning to think this might be an unanswerable question. I want to know if there is a theoretical way to determine the worth of a particular good, ...
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2answers
1k views

What would happen if the world switched to a single currency?

What would happen if all countries suddenly stopped using local currencies and adopted a global currency (like the Euro, but for everyone)?
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0answers
29 views

Consumption of the unemployed

I am wondering how the consumption of the unemployed varies over the business cycle. We know that wages of people getting fired in busts are higher than wages of people in booms (Mueller 2012), so ...
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1answer
233 views

Unemployment: Human Capital Deterioration

I am looking for Macro-Labor models that include deterioration of human capital. The mechanism is simple: The longer you were unemployed, the more human capital you are losing. However, this is ...
2
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0answers
337 views

Supply-side economics: reduction in tax

In a nutshell Supply-side economists support reductions in tax, because government revenue can increase (according to the Laffer curve) and businesses and consumers will be incentivised to invest (...
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2answers
778 views

Alternative to Intermediate-macroeconomics book by Mankiw

Please suggest a good alternative to intermediate macroeconomics by Mankiw. A book with better teaching and which develops better understanding but at a similar level in terms of difficulty. I ...
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1answer
55 views

Bubble and productive investments

Is there some consenus in the literature as to what features characterize a bubble investment as distinct from a productive investment?
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0answers
53 views

Profit-Margins in the NK Model

How do profit margins vary over "business cycles" in the new Keynesian model? I'm interested in responses of profit margins (actual price markups) to all three standard shocks in NK models: - TFP ...
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7answers
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Mathematical Micro/Macro Economics Textbook Recommendation

I was formerly an economics major and now also majoring in mathematics. I want a textbook that is rigorously based on mathematics; not just using mathematics whenever the author wants, but in a more ...
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1answer
417 views

Is elasticity of substitution between goods empirically constant?

In New Keynesian models, we use a lot of CES assumption, usually Dixit-Stiglitz, to develop an economic model. Is CES, constant elasticity of substitution between goods, empirically (approximately) ...
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1answer
996 views

Deriving formulas from Gali's book on the New Keynesian model

I've found this link with all the derivations from Gali's book on New Keynesian model. In page 13, eq. $(3.7)$, the author derives the optimal price-setting rule $P_t^*$ by a representative firm that ...
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1answer
717 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 ...
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1answer
181 views

Lump sum taxation in the overlapping generations model

I am working through my textbook's problems, using the overlapping generation's model. In this economy, people are endowed with $y$ goods when young, and nothing when old. They will choose to exchange ...
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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.
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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 ...
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2answers
113 views

Overview: Crises and their causes

There have been many business cycles in the US over the past 50 years (although less so since the great moderation). Many of us youngsters are too young to remember many of these. Is there some ...
6
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1answer
119 views

Gali and van Rens: The Vanishing Procyclicality of Labor Productivity

Let's see how questions like the following are taken here. Gali and van Rens, 2014 show that empirically, the correlation between $Y, Y/L$ has been declining over time. In fact, it only was a "real ...
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2answers
278 views

Solving Kaplan and Menzio: Shopping Time

Kaplan and Menzio's shopping time model is a search&matching unemployment model where we, for a steady state equilibrium, need to determine to variables: $J$: Value of a worker $u$: unemployment ...
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3answers
458 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 ...
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2answers
854 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, ...
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2answers
581 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 ...
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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 ...
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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 ...
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3answers
236 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 ...
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1answer
129 views

Help interpreting a Taylor rule [closed]

I need a bit of help interpreting this version of the Taylor rule I stumbled across recently: $$\ln\frac{1+i_t}{1+i} = X_i \ln\frac{1+i_{t-1}}{1+i}+X_{\pi}\ln\frac{\pi_t}{\pi}+X_y \ln\frac{Y_t}{Y}+...
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2answers
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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 ...
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1answer
680 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 ...
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1answer
262 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 ...
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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?
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2answers
2k views

Are debt/GDP ratios calculated with real or nominal GDP as the denominator?

As the title suggests, I would like to know whether the numbers are generally calculated with real or nominal GDP. Besides that I would also like to know whether it matters and how significant of a ...
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1answer
200 views

Adjusting GDP for Environmental and Resource Impacts

It is widely recognised that GDP as conventionally measured does not reflect an economy’s impact on the environment and its consumption of natural resources. There have been various attempts to ...
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2answers
426 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}\...
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2answers
7k views

If all quantities produced rise by 10 percent, and all prices fall by 10 percent, which of the following occurs?

I am having a hard time deciding for this question: If all quantities produced rise by 10 percent, and all prices fall by 10 percent, which of the following occurs? A) Real GDP rises by 10 percent, ...
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1answer
3k 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 ...