Questions tagged [self-study]

Questions about self-studying economics, including curriculum design, study strategies, resources, etc.

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40 views

Exchange economy find core

Find Pareto optimal allocations and the core for the following economies Consider an exchange economy with two agents and two goods. Let consumption sets are the nonnegative orthant. Agent 1’s utility ...
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115 views

Question on General Equilibrium: how to write offer curves?

QUESTION: Consider simple two-person, two-good economy in which agents’ utility functions are given by $U_1(x_{11}, x_{21}) = min\{x_{11}, x_{21}\} $, and $U_2(x_{12}, x_{22}) = min\{4x_{12}, x_{22}\}...
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49 views

These two estimators are equal?

I have a question so basically. I have two model $$y= X_1b_1+X_2b_2+u$$ And $$X_2=y\beta_1+X_2\beta_2+v$$ I want to show $b_1=\beta_1$ Are these estimators are equivalent? $$b_1= (X_1’M_1X_1)^{-1} X_1’...
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23 views

The instrument in “The Colonial Origins of Comparative Development”

I am hoping to understand when an instrument is appropriate. For the purposes of this question, I'm considering a simplied version of the model in AJR (2000): $$\begin{aligned}\text{GDP} &\sim \...
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38 views

Why does a firm in a perfectly competitive market not need to cover fixed costs in the short run?

While studying, I came across the solution that in some cases only the produces surplus, PS, needs to be positive, however not the profit, $\pi$. That means that if $PS \geq 0; p \geq AVC$, whereas, e....
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47 views

Market impact function

I have the following Dynamical system for market impact function $$p_{t+1}-p_t=a(d_t-s_t)$$ $$s_{t+1}-s_t=bp_ts_t-cs_t$$ $$d_t=y-rp_t$$ where $s_t$ is quantity supplied, $d_t$ is quantity demanded, ...
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241 views

Study guide (and…) for “Intermediate Microeconomics with Calculus” by Varian

I have been googling study guides, solution manuals and other helpful material made by professors. But I have not found anything useful. Q: Do you guys know anything that will make the book easier ...
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2answers
493 views

Question on Central bank loss function interpretation

How do you interpret this central bank’s loss function: $$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$ where $\alpha >0$ and $\hat x$ is output gap. Phillips curve is $\pi = \theta \hat{x}+\...
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231 views

Central bank loss function (I did a solution, but it doesn’t totally make sense I guess)

I have question on central bank loss function. We know that the central bank loss function is $$L(\pi, \bar{Y})= (\pi- \pi^e)^2+\beta \bar {Y}^2$$ And we know that fisher equation is $$i=r+\pi^e$$...
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77 views

Sequential Price Competition for Perfect Complements

There are two goods, $1$ and $2$ produced by two firms at zero marginal costs. The goods are perfect complements. The demand for each goods is: $Q_1=Q_2=a-(p_1+p_2)$. The prices are set sequentially, ...
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60 views

Neoclassical model with proportional taxes

In a certain economy, time is discrete with periods $t=0,1,2,...$. The economy is populated by many households and identical firms. The utility of a household is: $\displaystyle\sum^{\infty}_{t=0}\...
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170 views

Spence's Job Market Signaling Game

I have a little doubt in the Job Market Signalling Game. I am referring to A Primer in Game Theory: Gibbons, Chapter 4, Signaling Games The attached paragraph refers to a Separating Equilibrium case ...
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1answer
121 views

General Equilibrium Involving Production

I need a little conceptual clarification. For a standard $N*K*M$ general equilibrium model, would an allocation, say, $y^k$ be Pareto Optimal if it does not solve $max(py^k)$? I understand that the ...
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2answers
69 views

Yield To Maturity exact meaning

From investopedia: "YTM is the total return anticipated on a bond if the bond is held until it matures" I have also seen this interpretation used in other sources however this seems wrong to me. ...
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1answer
272 views

Prove that $u$ is a utility function for $\succsim$

If X is finite, define this function $u : X \rightarrow \mathbb{R}$ by $u(x) = |\{z\in X:z \prec x \}|$. Prove that $u$ is a utility function for $\succsim$. Is it sufficient to prove that the ...
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58 views

when a=0, would economy accumulate more physical capital? Why?

Utility function is $U(c_t,l_t)=(1-a)ln(c_t)+aln(l_t)$ $l_t$ is leasure time $c_t$ is consumption Production function is $y_t=k_t^e(1-l_t)^{1-e}$ $k_{t+1}=i_t+(1-\delta )k_t$ where k is ...
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74 views

Capital accumulation

I have following dynamic optimization problem $$V(k_0)=\max \sum_{t=0}^{\infty} b^t((1-a)ln c_t+a ln(l_t))$$ Subject to $l_t+e_t=h$ and $y=Ak_t^pe_t^{1-p}$ and $k_{t+1}=i_t+(1-x)k_t$ Where c is ...
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1answer
72 views

The verification of my solution

Farmer Smith's cattle wander into Farmer Jones' land once a month and cause $\$3,000$ of damage. If Smith reduced the size of his herd by half it would reduce the damage by half but it would also ...
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1answer
409 views

Taxing a monopoly

can someone explain me why in some books the Demand and marginal revenue moves and but in other books is the marginal cost that moves. Is this like taxing the demand vs taxing the supply? so the ...
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1answer
184 views

ln(log) of energy consumption in a econometric analysis

i'm applying a panel data analysis. I have four variables; real GDP, trade openness, energy price and energy consumption. I took ln (log)of trade openness,real GDP and energy price. but i cannot ...
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33 views

How to derive consumer expenditures in EMEA 14.2.5

I am working on a problem 14.2.5 from EMEA by Sydsaeter, Hammond and Strom. Consider the consumer demand problem: $$ \max_{x,y} U(x,y) = \alpha \ln(x-a) + \beta \ln(y-b) \text{ s.t. } px+qy=m \tag{*} ...
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22 views

Coming up with a self self teaching curriculum in economics?

I'm a college grad- engineer by trade and wanted to learn about economics. Since I don't know much about the subject I'm not sure exactly how to progress with learning the field. I've started with ...
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33 views

calculation of the real domestic return of a foreign stock

I would like to calculate the real domestic return of a foreign stock What I know Real price is $$P_{Real, t} = \frac{P_{Nominal, t}}{CPI_t}$$ where CPI is consumer price index. And I know that the ...
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32 views

Practical guide to Structural Equation Modeling

I am currently self-learning Structural Equation Modeling. I have studied some theory and also a bit about the software implementation, but not enough to practically conduct an SEM study. I wanted to ...
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33 views

Second welfare theorem and non-continuous preferences

Are there any monotonic and strictly convex preferences that are not continuous but the second welfare theorem does not hold for them?
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29 views

Types of Economies of Scale

Context: Delegation informed prime Minister that textile sector is working at fullest capacity due to government policies. They further said the energy package, timely refunds and other facilities had ...
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41 views

Best way to learn economics for an interested layperson with a mathematical background

What's a good way for a mathematically-literate layperson who's interested in seriously learning economics? I suppose the quick answer is "read a textbook", but 1) textbooks are boring, 2) ...
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69 views

Policy ineffectiveness proposition

Suppose, the Aggregate supply is given by the Lucas Supply Curve - $y_t = ȳ + b(P_t - E_{t-1}P_t) + μ_t$ where $μ_t$ is stochastic supply shock (following standard normal error properties). Aggregate ...
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26 views

Calculation of theoretical futures value

we form a stock index by using only two stocks in the index. One of the stocks is the Stock-A. The current selling price of the stock-A is 103 dollars and the second stock is the stock-B. The current ...
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39 views

Why decreasing co-state variable (over time) is Compulsory?

I have a short question. In the continuous time infinite horizon optimal control maximization problem Like $$\max \int^{\infty}_0 u(c_t)e^{-pt}dt$$ I use current hamiltonian function and I obtain ...
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19 views

Questions regarding 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015

This question is with reference to the paper 'Efficient Trade with Interdependent Values' by Marek Pycia and Peng Wang,2015(See here). At page no. 4 of the paper, the authors describe $v_i$ as the ...
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115 views

How to show that a leontief utility function is homothetic?

usually what i do to show that a utility function is homothetic is by either showing that the function is homogeneous or if the MRS is homogeneous of degree 0. However the MRS is not defined. So im ...
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52 views

two period consumption problem

Ms. A earns 25,000 dollars in period 1 and 15,000 dollars in period 2. Mr. B earns 15,000 dollars in period 1 and 30,000 dollars in period 2. they can borrow money at an interest rate of 200% and can ...
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66 views

Strategy sets and SPNE

I need to find the startegy sets for the two players in this game. I understand that the game has only one subgame, that is, the entire game. I cannot seem to understand the strategy sets of the ...
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0answers
29 views

Linearisation of the IS curve?

How to the IS curve linearised around the structural equilibrium?, what is the math behind it?
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2answers
179 views

Balance of Trade ( Surplus and Deficit)

I'm new to economics. I want to ask that what remedies that the government can actually employ to address the deficit/surplus in the fish trade balances over time? My attempt, Trade deficit (i) The ...
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1answer
114 views

Leontief utility with producer goods

This question may require some explanation. Also, I'm way out of my depths so please let me know if this question is misguided. The standard Leontief utility seems to assume the goods are consumed in ...
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2answers
47k views

Determining optimal consumption bundle [closed]

The utility function of the consumer is $5x^{0.5}y^{0.5}$ The income of the consumer is $5000$ The price of good $x$ is $1,000$ and the price of good $y$ is $500$. Determine the optimal ...
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1answer
40 views

Revealed preferance: elementary question

When the market prices are Rs 5 per apple and Rs 6 per orange a person buys 16 apples and 28 oranges. When the prices are Rs 4.4 per apple and Rs 6.4 per orange ,the person buys 20 apples and 25 ...
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1answer
305 views

Finding the optimal tax

I have a problem regarding the last two questions of this exercises because I can not understand how to set up my model in order to find the optimal tax the optimal quantity to be as there was not a ...
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1answer
52 views

Find the set of Pareto efficient payoffs in game theory [closed]

Here I want to find Pareto efficient payoff set. The answer is (C,β), (B, β), (C, δ) But I don’t understand why? Please explain clearly this answer. Thanks a lot
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1answer
360 views

Question on oligopoly.

Consider an oligopoly between two identical firms producing a homogenous good with constant marginal cost where firms face linear market demand. $B_i(q_j)$ denotes firm i’s best response given the ...
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1answer
463 views

Profit maximization and allocative efficiency result

I completely stuck to the last part of this exercise. I cannot understand how can I determine an allocative efficiency result. Any help will be appreciated. Thank you.
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1answer
159 views

Auction question

I’m studying on auction. But I couldn’t understand some questions about this topic. And I cannot solve such type questions. For example, I know that a set of symmetric and risk neutral bidders ...
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2answers
834 views

Log relative price index - calculation question

I have US CPI prices & Canada CPI prices (where US is my base). I am trying to calculate the 'log relative price index'. Do I log the individual CPI prices first then calculate log Canada CPI/log ...
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1answer
31 views

Demand and Supply Curve Shifts

I Study economics independently at Marginal Revolution University. But I am stuck with few of the very first Concepts. Those are: Demand and Supply curve Shifts in Isolation. Demand Curve Shifts: When ...
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1answer
2k views

Inferior and normal good and the change in price of those goods

In general, We know that if a good is normal, then as your income increases, then demand of that good increases as well as price is fixed. Similarly, if a good is inferior, then as your income ...
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1answer
55 views

IS LM CURVE QUESTİON

For keynesian model, Describe how, if at all, each of the following development affect the IS and/or the LM curve, and the equilibrium (r; Y ): Investment demand becomes less sensitive to the interest ...
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1answer
62 views

NASH equilibrium [closed]

How to approach questions like these: In a two player static game with a discrete strategic space that permits each player to chose one of the four possible strategies what is the maximum number of ...
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1answer
534 views

Question about budget constraint and utility maximization [closed]

I have also following budget set $$B=\{x=(x_1,x_2)\in R^2_+ \mid 2\sqrt{x_1}+x_2\le y\}$$ where y is income. Assume that there are two stories. The agent can shop in both of them. The first store ...

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