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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1answer
177 views

Optimal residential location and multivariate Frechet distribution

I was reading the paper "Housing Constraints and Spatial Misallocation" by Chang-Tai Hsieh and Enrico Moretti. First they define the utility function $$ \ \ V_{ji}=\varepsilon_{ji}\frac{W_{i}...
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1answer
38 views

What is the implication of perfectly reversible capital?

I am reading the lecture note in labor economics by Acemoglu and Autor. In the chapter of basic search model, they assume capital is perfectly reversible, and argue that "Perfect reversibility ...
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What does it mean "non-Walrasian" or "quasi-Walrasian"?

In a recent NBER workshop, Robert Hall started a discussion with his first slide summarizing the macro literature. I am not very familiar with either DMP model or New Keynesian model and have no idea ...
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1answer
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Multivariate implicit differentiation (Samuelson, 1948)

I am studying "The Simple Mathematics of Income Determination", by Paul Samuelson (from book is called "Macroeconomia (artigos selecionados)", by APEC-CAEN. It is the 1st chapter ...
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Can anyone explain why the Swiss balance of payments is not balanced (real data)?

While doing a little research I went to the Swiss National Bank's website and downloaded their data on the Swiss balance of payments. The data is here: https://data.snb.ch/en/topics/aube#!/cube/...
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Economic Surveys for Japan other than the Quarterly Tankan?

I am doing a project that requires economic survey data. I have already finished for Europe (which has the European Commission survey that is released monthly) and for the US (ISM Reports, National ...
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1answer
53 views

Does it make sense to talk about Bitcoin 'inflation' when little to no goods and services are listed in Bitcoin currency?

I think of inflation as a generalized increase in the price levels of a basket of goods and services. I should add that my understanding presumes that inflation should be measured in the same currency ...
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What is meant by the sentence in the context of "Monetary Policy in India"? [closed]

To quote from the book, "Indian Economy by Nitin Singhania," this is what I found out,"It is a macroeconomic policy used by RBI to influence the supply of money." What is meant by ...
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1answer
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Why does a higher risk aversion leads to a lower intertemporal elasticity of substitution?

Mathematically, a higher risk aversion leads to a lower intertemporal elasticity of substitution (there is an inverse relationship). But why? If I become more risk-averse, I would like to smooth my ...
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1answer
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A differentiation step in a economic growth model

I started studying Olivier Blanchard and Stanley Fischer's Lectures on Macroeconomics, but I couldn't follow the reasoning behind a differentiation step (at least I think it is something involving ...
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Are these two different cases when it comes to Forex Reserves?

In a forex reserve, what is the difference between "Buying US Dollars to pile up reserves" and "Using FPIs, remittances or exports to build up reserves" ? How differently do they ...
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1answer
29 views

Derive the Demographic Structure in the Steady State

I am reading a paper with following description on the demographics in their model: "... each (representative) agent lives for $T$ periods ... We assume that each individual has $e^{f}$ children ...
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External Commercial Borrowings in Indian Context

I was trying to understand ECB recently and while browsing through the RBI official page I have found that ECBs cannot be used for a) Real estate activities. b) Investment in capital market. c) Equity ...
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1answer
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Non-trivial steady state

Consider the growth model with inelastic labor supply, full depreciation, log utility and CRS technology with the Bellman equation be defined as follows: $$V(k)=\max(log(k^\alpha-k')+\beta V(k'))$$ st ...
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What are the justification of using 1990 or 2010 as benchmark in studies?

Normally, many international studies and documents using multiple-of-10 years (for example 1990, 2010) as the benchmark year. For example: Dong,2019, p.899 used 1990 as the benchmark to calculate the ...
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FOC for stochastic Ak Model

(Note: the other posts do not cover this part of the derivation) I have tried to compute the FOC of $k_{t+1}(s^t)$. I get that $0 = -\lambda_t(s^t)$; I can't see why the sigma remains for the FOC of $...
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Value function iteration with stochastic productivity's standard deviation

Hello I would like to know how would you discretize the AR(1) process of technology in a standart RBC model when there is stochastic productivity's standard deviation. Namely I have: Technology $Z_t$ ...
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Value function iteration with habit

I would like to know how I could write a value function when there are habits in preferences. I have the following equations: $$ u\left(C, t, H_{t}, L_{t}\right)=\frac{\left(C_{t} / H_{t}^{\kappa}\...
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Alternative ways of visualizing longitudinal macro data?

Problem: Visualizing longitudinal is challenging when the dataset has large number of panel members. A common ways to visualize such data is to either make a large set of small individual plots such ...
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27 views

Fluctuations in income

Consider the following income fluctuation problem. An agent lives for two periods, 0 and 1, and faces stochastic income in period 1. We are given this utility maximization problem: $$\text{max}\ U(c_0)...
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2answers
107 views

long run growth of money supply

I am trying to understand how the money supply (bank deposits + currency) grows over time. That's the end goal. This is the first part of my awful struggle. I'm superconfused, and almost everything I ...
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1answer
45 views

Derivations of trade balance

I am facing some problems in deriving the two equations for trade balance (from which we derive that the trade balance is zero within each country) in the article "A SIMPLE FRAMEWORK FOR ...
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1answer
34 views

Data on inflation target on different countries around the world

Does someone know if there's a page, like a "global bank" online page, where one could see the inflation target for different countries? For example, in x country, for x' year, the inflation ...
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3answers
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Why doesn't national savings, in aggregate, always equal to zero in monetary terms?

Referring to this question and this one Imagine you had a closed economy with two people and they both started off with $100 dollars. How would net savings in aggregate ever not be zero? Anything ...
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1answer
38 views

Does savings always equal investment? Are there any cases where savings could be removed from the economic system altogether and break the balance?

Assuming a closed economy, does savings always have to equal investment? If an individual produces a certain amount of a resource and saves it, that becomes part of the savings of the economy. However,...
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Would a car that was produced last year but bought this year be accounted for in the GDP? [duplicate]

The equation for the GDP is: $$C+I+G+(X-M)$$ If consumers are buying new cars produced last year...would those still be included in the GDP?
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Can an appreciating currency lead to inflation?

If a currency, e.g. the rupee (INR), is appreciating against, say, the USD, it possibly means that there is a high demand for the former. India could have net exports, high remittances, increasing ...
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1answer
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Can inflation show up in assets without necessarily being reflected in classic inflation indexes?

I have been having an argument with a friend of mine who obtained an economics degree in college. I have been arguing that increased money supply from the fed has led to inflation in asset prices, ...
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1answer
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Trouble at differentiating a consumption function

everyone. This is kind of a basic question, but I have a weak background on calculus and I already tried to figure this out by myself for a few hours without success. So, I am finally appealing on you ...
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1answer
29 views

Financial manipulation and Inflation as tools for sovereign debt default

In the book This Time Is Different, by Reinhart and Rogoff, in chapter 8, the authors state that Higher minimum level of reserves (?) And/or upper bound/ceiling to interest rates ( will help increase ...
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Intro to Stokey / Lucas and Sargent / Ljungqvist

I would like to ask, if you can recommend me some introduction to these 2 macro textbooks: Stokey / Lucas and Sargent / Ljungqvist, which I will be using in the 2nd year MA in Economics. So something ...
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1answer
31 views

To what extent can cryptocurrencies be influenced by monetary policy?

Background In modern economies, at least up until ~10 years ago, it was assumed that a currency would be technically able to be subjected to monetary policy, that is, where more money is created or ...
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Calibration of labor market frictions parameters

I want to refer to the following paper A Three State Model of Worker Flows. My questions are regarding the calibration of parameters. First, I would appreciate any help when on p. 11 it says that $\...
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Determining the effect of fiscal policy on foreign exchange market

I'm in AP (high school) Macroeconomics and I confirm if my thinking is right. Suppose the US and Taiwan are trading, and the US government decides to decrease taxes. I think this should have two ...
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1answer
94 views

Classical Theory of Inflation - Money Supply, Money Demand and Prices

In every textbook, website I read when talking about the classical theory of inflation, I see the diagram below which depicts the value of money, prices etc. This one below is from Spark notes (https:...
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1answer
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What does negative surprise mean?

I have a look at the meaning of "negative surprise" from google but there is no clear explanation so far. When listening to Bloomberg Market Concept, in the picture, Surv(M) < Actual, ...
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How PMI is the best leading economic indicator and how to retrieve it?

From Bloomberg Market Concept, PMI (Purchasing Managers' Index) is the best leading indicator that alerts to forthcoming turning points in real GDP growth. For example, PMI fell to its low point and ...
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2answers
185 views

Limit of utility function in Ramsey-Cass-Koopmans model

I have given the utility function for the Ramsey-Cass-Koopmans model, as follows: $$ u(c_t)=\frac{c^{1-\theta}-1}{1-\theta} $$ The claim is that as $\theta \rightarrow 1$, then the funciton is ...
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1answer
58 views

Separation rate

I want to refer to the paper Aggregate implications of indivisible labor, incomplete markets, and labor market frictions. In Footnote 9, there is a brief explanation of how the separation rate is ...
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1answer
60 views

Why high levels of inflation doesn't leads to high levels of employment?

According to the original Phillips curve $\pi=(\mu+z)-u$ there's a negative relation between inflation and unemployment. That being said, if there were a really high level of inflation, then there ...
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$15 dollar minimum wage in the U.S. a good idea for the U.S. economy? [duplicate]

After taking principles of micro and macro economics, both intro-level courses, I got the impression that price controls are generally not a good idea for a market economy. However, I continuously see ...
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How to rebase quarterly price index?

For rebasing annual price index, we divide all price indices by the value of the new base year. With quarterly price indices, there is not a single base year with the value 1.00. In the base year, ...
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2answers
467 views

Euler equation in Continuous time VS Discrete time

I have seen the euler equation in discrete time for the baseline neoclassical growth model written as: $$\frac{U'(c_{t+1})}{U'(c_{t})}=\frac{1}{\beta(1+r)}$$ however I have also seen the euler ...
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1answer
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Interpretation of sub-unity money velocity

I've read through questions like: Implications of declining money velocity and noticed this trend has intensified since, with velocity printing the lowest readings in history in the past few months. ...
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2answers
105 views

Why in the quantitative equation: $MV=PY$, $V$ and $Y$ can be taken as fixed?

To equation is \begin{align} MV=PY \end{align} where $V=\frac{1}{k}$. Why $V$ and $Y$ can be taken as fixed or constant? Why can $V=\frac{1}{k}$ too? Thanks in advance
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1answer
45 views

Total differentiation in a IS curve context

everyone. I'm having a hard time trying to figure out how the total differentiation occurs in this exercise. In this excerpt, from Inflação e Crises", by Affonso Celso Pastore, the author ...
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What is the most important factor in sample selection for time series models?

Is there some convention in sample selection for time series analysis? And what is the most important factor in this regard? I mean, I have seen Kónya, I. (2018) use annual data from 1995–2016 to ...
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1answer
38 views

Is there a way to trade currencies several times and end up with more money than one starts with?

Conjecture: The foreign price value of a currency is not absolute. Scenario: If the euro appreciates relative to the British pound and the price of the US dollar stays the same relative to the euro, ...
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0answers
49 views

First order approximation of consolidated budget constraint describing the evolution of government debt

I am trying to derive a first order approximation of the government's budget constraint around a zero inflation steady state. This is from Jordi Galís 2020 paper "The effects of a money-financed ...
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Deriving the New Keynesian Phillips Curve (NKPC)

I have a question regarding the NKPC. I would like to know if it is possible to derive the NKPC from a sticky prices model, without making assumptions regarding the production function firms face. I ...

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