Questions tagged [theory]

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14 views

Alternative theories of money and financial markets? [closed]

what is the difference between post-keynesian and marxist theories? and why the alternative theories of money and financial markets exist?
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27 views

Theoretical basis of consumer confidence

I have read several papers on the formation of consumer confidence, how it is measured and also its role in predicting economic outcomes empirically. But I haven't come across any theoretical model of ...
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7answers
6k views

Why does economics escape Godel's theorems?

I've seen many professors say that Godel's incompleteness theorems don't apply to economics. Of course I've seen others like Yanis Varoufakis who has on record said that many economics papers defy the ...
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1answer
30 views

Interaction of redistributive taxes, monetary policy and the growth rate

While studying macroeconomics, interaction with taxes are not seen to importantly. I am though interested in an interaction with redistributive taxes (such as the income or the inheritance tax rate), ...
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2answers
113 views

Curiousity the validity of an example of normative, positive and consumer surplus?

Following up a pretty long but very informative discussion with 1muflon1, I want to expand and merge with consumer surplus to have a big picture. In research of Dasgupta, 2019 about that after ...
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1answer
113 views

Is there any overlap between Rawlsian approach and uncertainty avoidance?

From the definition of the Rawlsian approach The Rawlsian approach to social welfare, built on the foundation of the “veil of ignorance” (Rawls, 1999, p. 118) where "veil of ignorance" is ...
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1answer
91 views

Is there any example to see the differences among Rawlsian ethics, Utilitarianism or (classical) liberalism ethics in policy economics?

From a decent answer and comment here of 1muflon1, I am motivated to know more about Rawlsian ethics, Utilitarianism, or (classical) liberalism ethics in policy economics. However, so far, I still not ...
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2answers
229 views

Why "positive theory" is important in discussions of how antitrust law achieve "normative goal"?

In this description regarding positive theory and normative theory, from what I understand, positive theory is based on fact and cannot be approved or disapproved (e.g., explain how the economy ...
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1answer
127 views

What is the difference between Impression Management and Signaling Theory?

I'm interested in theories on how organisations shape their stakeholders' (especially consumers' and investors') perceptions and decisions. I read about Impression Management and Signaling Theory. ...
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1answer
132 views

Effect of bounding action space on the set of equilibria

Suppose $N$ players play a game, where each player's action space is $[0,1]$. Each player has an identical continuous utility function $u:[0,1]\times [0,1]^{N-1}\rightarrow\mathbb{R}$, where the first ...
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0answers
81 views

What is the "recursive moral hazard theory" of "trade credit"?

When reading a recently published paper, I saw the paragraph We construct a sample of over 200,000 supply chains to conduct a chain-based analysis of trade credit. Our study uncovers novel stylized ...
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1answer
148 views

Krugman 1980 AER, Deriving Equation 14

I have been trying to derive equation 14 from Paul Krugman's 1980 AER paper. I keep getting a different result, and further, I find that equation 14 from the paper does not balance payments when I ...
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0answers
43 views

Definition of strictly convex preference

Let $x,y\in X$. Does strictly convex preference (which implies that the utility is strictly quasiconcave) mean that: $x\succsim y$ implies $\alpha x+(1-\alpha)y\succ y$ for any $\alpha\in (0,1)$?
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2answers
121 views

Convex rationalization when the budget sets are segments?

Backgroud: SARP can be defined on general budget set. SARP: Assume for all $B$ the choice $c(B)$ is only one element. If $x_i,x_{i+1}\in B_i$, and $x_i = c(B_i)$, for all $i\in \{1,N-1\}$, then $x_1=...
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0answers
23 views

Selection of functional form for utility function in theoretical model

I am starting to work on an IO model and I am puzzled in front of the choice of the appropriate utility function. Since the concept of utility is so abstract, and one cannot directly refer to ...
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1answer
73 views

Can I rename a utility function based on its properties?

A big name researcher gives a name to a specific utility function 30 years ago. Now I am writing a paper and feel that a new name might be more suited because of the properties associated with the ...
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1answer
94 views

Actions in economics

Mirowski 1989 argues economics and physics have frequently informed each other's theoretical development, and neoclassical economics has the same Lagrangian and Hamiltonian formalism frequently seen ...
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1answer
84 views

Lecture notes competitive labor market with minimum wage

Can somebody recommend lecture notes that derive competitive labour market model equilibrium with minimum wages? This has been surprisingly hard to find, because most lecture notes use minimum wages ...
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1answer
79 views

When can one drop time subscripts? Example from Angrist and Kugler (2003)

Not the first time I am asking myself, but in this paper they actually start with a time dependent maximisation problem and then drop all time subscripts. Background: They have profit maximisation ...
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0answers
26 views

References on Cobb-Douglas Function

I am wondering why everybody uses Cobb-Douglas production functions? Nowadays they are so standard that they are just written down without further discussion. Does anybody know more about this and can ...
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0answers
20 views

Brücker et al. (2014) migrant labour supply shock

Brücker et al. (2014) write down a stylized model of wage-setting with a labour supply shock (migration), which I find hard to follow. Maybe somebody worked on it or is interested.. Labour force is ...
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0answers
38 views

Loosely speaking, are all modern economies 'Keynesian' in their stance on spending during downturns?

Keynesian economics is defined as: increased government expenditures and lower taxes to stimulate demand and pull the global economy out of the depression. Do all modern economies adopt a Keynesian ...
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1answer
107 views

Intuition of Shephard's Lemma in Reverse

I am not sure how to word this question. I understand the envelop theorem pretty well and as a result Shepard's Lemma. The proof is relatively straightforward. I am getting stuck on the intuition ...
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2answers
163 views

Why should prices come down (in theory) in an educated society with a well-run government?

In Chapter 1 of Robert Kiyosaki's "Rich Dad, Poor Dad", the rich dad says: "In an educated society with a well-run government, prices should actually come down". Is there any ...
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0answers
36 views

Identifiability of Non-Parametric Utility Function?

I recently learned that EU characterized by independence and weak ordering is identifiable, but a utility function like: $U(x)=v_1(x)v_2(x)$ is not identifiable. Does it mean that "cardinal ...
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112 views

Certainty equivalence when the utility is semi-continuous instead of continuous

Let $U:\mathbb R^2\to\mathbb R$ be a utility function. If $U$ is strictly increasing and continuous, then it is well known that for any $(x_1,x_2)$ there exists a certainty $(c,c)$ such that $$U(x_1,...
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1answer
324 views

Is it necessary to ask permission before including someone in the acknowledgements of a economic research paper?

Do I need permission to thank someone, even if I said “all mistakes are our own”? Do I have to make sure that the person being thanked must read the paper, or, it is fine if he just discussed about ...
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0answers
72 views

Who were the first economists arguing that utility maximization is the core of rationality and economic behavior?

I am looking for the first economists arguing that maximizing utility function is the iff condition of rational behavior. I've learned that neoclassical economics is founded on this argument. Is this ...
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1answer
85 views

What additional axiom to GARP do we need to generate a differentiable or smooth utility function

After researching for a while, I find this: https://www.jstor.org/stable/1913607?seq=2#metadata_info_tab_contents They come up with an axiom called SSARP that generates a preference with smooth demand ...
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2answers
45 views

Famous recent paper on monetary Unions

do you know any (theoretical or empirical) recent famous paper about monetary unions ? I heard that topics like "monetary unions at ZLB" or "fiscal coordination during crisis time" ...
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0answers
59 views

Conditional distributions in model with continuum of agents

Many economic models consider a continuum of agents, $i \in [0,1]$. Suppose these agents have characteristics $(x_i, y_i)$, which are independently distributed. Are all possible values of $(x_i,y_i) \...
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3answers
58 views

Theoretical economy calculation of closed country

Is there any well-known theoretical solution to the problem as described below? I am considering an ideal very simplified case. There is a closed country/community of N people. All people are working. ...
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1answer
58 views

Are there some examples of theoretical models that discuss pandemics?

I am looking for some papers/references that showcase theoretical economic models that incorporate pandemics. Most work seem to be purely empirical. Does anyone know of some papers that try to model ...
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1answer
69 views

Economics perspective of connected workers

According to the Deloitte report published here, a connected worker is defined as someone whose working life is changing due to digital and other technologies. This is due to advancement of ...
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1answer
49 views

Where can I find economics theories to learn about? [closed]

I'm a beginner to economics so I do not have much knowledge. However, I enjoy learning new economics theories. For now, I normally search for economics theories by looking at those that won nobel ...
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3answers
1k views

What is the point of all the models in an economics degree?

I am a student of Economics doing my masters degree and I have to say I am a bit tired of all the models. On the one side, there is these models where I can see how they are derived, which always ...
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1answer
119 views

Continuity of preferences

Let $\succsim$ be a transitive and reflexive relation on a metric space $X$ with closed upper and lower contour sets. If $\succsim$ is not complete, does it hold that: for all converging sequences ...
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1answer
82 views

Prove that a preference is linear

Given the following two conditions: $x\succ y$ implies $x+a\succsim y+a$, And, $x\prec y$ implies $x+a\precsim y+a$ We want to prove that $\succsim$ is a linear preference. One of the ...
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1answer
97 views

When to use a lagrange multiplier?

I have a question in regards to the use of Lagrange multipliers in macro models. I have seen that when writing a Lagrange there are two ways to write the Lagrange multiplier: 1) Indexed or 2) ...
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1answer
124 views

MWG Proposition 2.F.1

Is homogeneity of degree zero necessary in proposition 2.F.1? It seems like the proof does not assume homogeneity of degree zero to establish the proposition. If this is true, it seems that ...
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1answer
28 views

The notation cl co (A)

I stumbled upon this notation, (cl co(A+C), while reading "Set Optimization—A Rather Short Introduction" by Andreas H. Hamel, Frank Heyde, Andreas Löhne, Birgit Rudloff and Carola Schrage. Is it ...
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1answer
492 views

How does expected utility theory treat losses?

I've been reading about prospect theory lately and have read often that prospect theory predicts people will be risk averse in gains and risk seeking in losses. This statement is typically ...
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0answers
46 views

Rotation of Quasilinear Utility

Let $u(x,y)=f(x)+y$ be a quasilinear utility. Now we rotate it by 45 degrees, (such that the $x-$axis becomes the direction of $(1,1)$) $v(x,y)=f(x-y)+x+y$. Is $v$ also a quasilinear utility? What is ...
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1answer
74 views

Envelope Theorem in Hopkins and Kornienko (2010)

This is from Hopkins and Kornienko (2010). In this model, $x$ is investments, $s$ is status, and $y=z-x$ is leisure, where $z$ is endowments. $x(r)$ is the optimal investment, and the relative ...
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1answer
168 views

GARP and SARP assumed mononticity?

Monotonicity means the decision maker prefer more goods than less. It is not mentioned in textbook that SARP and GARP preasumed monotonicity, implicitly. GARP: if $a$ is indirectly revealed preferred ...
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1answer
280 views

Is First Order Stochastic Dominance (FOSD) relation convex?

A convex relation is that $x\succeq y$ implies $\alpha x+(1-\alpha)y\succeq y$. Let $>_{FOSD}$ be $\succ$, is the FOSD convex? Intuitively it seems convex.
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1answer
74 views

Understanding agents selecting among markets

Let's say an entrepreneur can choose between starting a business in a competitive market with zero economic profit, and starting a business in a market that is not perfectly competitive with positive ...
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1answer
72 views

Factor-augmenting technologies (Acemoglu and Restrepo 2018c)

In that paper, they consider the following production function: $Y = F(A_KK,A_LL)$. Where: K denotes capital, L is labor, and $A_K$ and $A_L$ denote capital-augmenting and labor-augmenting ...
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1answer
164 views

Why does socialism not work? [closed]

There are many arguments that socialism doesn't work. It's becoming an increasingly popular topic as congresspeople such as Bernie Sanders and Alexandria Ocasio-Cortez push for policies that are ...
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1answer
35 views

Implication of the concavity of u

Suppose that we have the following inequality: $u( y- d) - u(y-d') \ge u(y' - d) - u( y' -d')$. The concavity of $u$ together with $y\le y'$ then implies that $d \le d'$. I sometimes come across this ...