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Questions tagged [theory]

The tag has no usage guidance.

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1answer
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When can one read the general theory of employment,interest and money?

I am a first-year undergrad econ student and was interested in reading Keynes' book. in the preface, Keynes pointed out that the text deals in the abstract and is meant for his fellow economists. ...
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31 views

Open Foundational Problems in Mathematical Economics

What are some open problems in mathematical economics which are treated as if they have been solved in economics papers? As an example, one of my teachers has previously pointed out to me that there ...
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2answers
43 views

When does an economic theory become true?

When does an economic theory become true? When does it satisfy requirements for true knowledge, e.g. similar to those in empirical sciences?
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Post Brexit Referendum employment theory

According to Chuka Umunna, Labour MP for Streatham and prominent pro-EU campaigner: People were told: "if immigration levels fall, it will be easier to get a job, and easier to get a job that's ...
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37 views

Is there a theoretical basis for any popular income- or wealth-distribution model?

When modelling income or wealth, we probably want a continuous distribution with a lower bound; statisticians have named many, but Pareto and log-normal distributions have been among the most ...
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2answers
41 views

A unique global currency and a balanced macroeconomic system

During my last trip, I traveled in Bolivia for two months, and I was struck seeing how life was cheap there, from a European point of view. I believe that is the same in the great majority of the "...
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2answers
31 views

understanding the proof of stochastic dominance.

$\int_a^b u(x)dF(x)$ (1)$ = u(t)F(t)|_a^b - \int_a^b F(t)u^\prime(t)dt$ (2)$ = u(b)-\int_a^b F(t)u^\prime(t)dt$ $= u(b)-(\Phi(t)u^\prime(t)|_a^b-\int_a^b \Phi(t)u^{\prime\prime}(t)dt=u(b)-\Phi(b)u^\...
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0answers
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Market efficiency in software, music, news, etc

I'm not an ecomonist, but have been tossing around some ideas in my head for a long time and thought I might ask here what resources or existing work might be out there. There are a lot of market ...
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4answers
322 views

Can the stock market grow faster than GDP indefinitely?

My understanding of conventional wisdom is that average long-term growth of advanced economies is expected to be significantly lower than the average long-term growth of the value of the largest firms ...
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0answers
38 views

Homothetic preferences [duplicate]

I want to prove that if a utility function that represents $\succsim$ has constant marginal elasticity of substitution (MRS) in proportional expansions along rays, that is: $$ MRS(x,y) = MRS(\alpha x, ...
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3answers
348 views

Are there any instances where short run demand/supply is more elastic than long run cases?

Conventionally both demand and supply for goods and services are both more elastic in the long run than in the short run. My Question Is there ever an instance where demand and/or supply for a ...
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1answer
42 views

Is there any good textbook for theoretical economics mathematical modelling? [duplicate]

I am currently reading some theoretical economics books and, of course, many mathematical expressions appear. I kind of guess their meaning, but it takes a lot of time and, after all, my guesses are ...
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0answers
42 views

Consequences of a positive uncovered interest rate parity (UIP) spread for an emerging market economy

Empirically we observe that the uncovered interest rate parity (UIP) does not hold; in fact the exchange rate adjusted return on an emerging market bond is higher than the return on US bonds; I know ...
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3answers
97 views

Looking for a term that explains market participants that lie about their participation to gain access to said market

I'm Looking for a term that explains the behavior of a market participants that will lie or exaggerate how much or what they offer in order to gain access to a market that would otherwise be ...
0
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1answer
47 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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1answer
29 views

Type of good that can be owned but not consumed when used

I'm an econ noob so apologizes if this is a dumb question. I'm trying to find if there is categorization of a good that can be owned but is not consumed when used. Tools are an example of this. A ...
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0answers
54 views

Money in New Keynesian models

I have been doing some reading on general equilibrium theory and it has made me highly confused regarding the logic behind NK models. If I have understood correctly, NK models are based on Walrasian ...
3
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1answer
53 views

Does the existence of insurance markets negate the broken window fallacy?

In the wake Harvey and Irma, I did some reading on the Broken window fallacy. It makes sense on it's face that after paying the glazier for the broken window, the shopkeep could not spend his six ...
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0answers
126 views

Most important but untested theories in economics? [closed]

In the opinion of the economists here, what are some of the more important theories in economics that remain untested? By untested I mean theories that, though perhaps evaluated using empirical data, ...
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0answers
47 views

Is there a branch of economics exploring the more or less “natural science” oriented approach?

Even given that economics deals with very complex sociological dynamics, today very advanced tools are available for simulations and reality analysis. Similarly, at least parts of psychology can be ...
1
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1answer
34 views

Gresham's Law applied to wampum and gold/silver coins in the 1600s

So I was reading an article by Nick Szabo called "Shelling Out" And in his introduction paragraph he explains how American Indians use bones and shells as a currency called "wampum". This currency ...
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0answers
195 views

How to self-study graduate level macroeconomics? Is there even a point?

As I had hoped to learn enough macroeconomic theory to get some research ideas, my goal at the beginning of this summer was to read through and complete the problems in an introductory advanced ...
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1answer
128 views

What is the correct economic term for beneficial “transaction frequency”?

I am not an economist but I am trying to track down and understand an economic principal (and/or theory) that I think is called "transaction frequency" but when I go searching on that term I find only ...
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Is Hayek's “The Fatal Conceit” Authentic?

Bruce Caldwell thinks the evidence "clearly points towards a conclusion that the book was a product more of [Bartley's] pen than of Hayek's. ... Bartley may have written the book" https://en....
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2answers
453 views

Monopoly and Taxes (Nicholson Exercise)

Hello I'm working through Microeconomic Theory : Basic Principles and Extensions of Nicholson and Snyder 10e, for an exam and I fail to get how to answer this question (p.517) : A specific tax is a ...
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1answer
115 views

Difference between LMSR and Liquidity-Sensitive LMSR

What is the difference between the LMSR (logarithmic market scoring rule) and the Liquidity-Sensitive LMSR (LS-LMSR) and what would cause prediction markets like Augur to focus on the later model?
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2answers
193 views

Do contemporary Marxist economists still deny the utility/value theory which underpins classical economics?

Do contemporary Marxist economists still apply the labor theory of value when analysing economic phenomena? Or do they e.g. acknowledge that value (and utility) is subjective as is common knowledge in ...
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1answer
246 views

What consumer preferences exhaust the budget?

Suppose that a consumer has a complete and transitive preference relation over R+. Further suppose that the consumer faces prices p = (p1,p2,...,p) 0 and has ...
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2answers
62 views

Economic Confirmation Biases

I'm not sure if this is the right place to post this, since my question is a bit more general to all of social sciences (indeed sciences in general), but I figured since Economics is a social science ...
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2answers
127 views

How to theoretically explain an exponential income distribution?

I have been working on income distributions for a while, and I've been asked to do a theoretical justification for the idea that income distribution follows an exponential function for low incomes. ...
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2answers
492 views

Core elements of Marxist Economics

I am interested in understanding the differences between mainstream economics and marxist economics. For that, a guide about what is central to the marxist economic theory (not political or cultural ...
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2answers
79 views

Are there strains of economics that are “no (political) economics”? [closed]

To support my belief in the arbitrariness of economic theory and thought, since different economic systems have their own rules, theories etc., which contradict the rules of other systems and which ...
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1answer
157 views

Transforming expected utility functions

I am using the following theorem: To better understand how I can transform expected utility functions. An example with which to work: I want to show that the preferences represented here satisfy ...
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3answers
760 views

Jokes in Economics; Challenging Assumptions in the Dismal Science [closed]

We've delved into questions about the history of economics. We've pondered what the most important equations in economics are. But in every science, academic culture inevitably forms a special set of ...
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Limits of utilitarianism?

In all of economics that I know, people maximize their Utility $U_i=f(x_1,...,x_n)$, and therefore make some kind of cost-benefit analysis. One obvious criticism to this model is that we often do not ...
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1answer
20 views

Static wage posting model and indifference to wage levels

Suppose a monopsonistic firm has the following simple profit function: $$\pi (w) = PL(w) - wL(w) $$ where $L(w)$ is the labor supply, $P$ is the constant output price, and it has a linear production ...
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1answer
45 views

Theories relevent to institutional quality and economic development [closed]

I want to write a term paper on institutional quality and economic development. what will be its possible theoretical framework?
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1answer
161 views

On closedness: commodity space

In Intriligator (2002, p. 143) we find the following statement: \begin{align} C = \{(x_1,x_2,\ldots,x_n) : x_j \geq 0,~j=1,2,\ldots,n\} \subset [0,\infty)^n \end{align} Thus commodity space ...
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1answer
36 views

Prediction market based on LMSR: Sell, or buy other side?

Consider a prediction market with two outcomes (Yes and No) and a scoring rule based on Hansons’s LMSR, i.e. ln(ea+eb), where a and b are the number of Yes resp. No shares sold. Assume that I have ...
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1answer
139 views

Have any economists ever argued that the notion of opportunity cost should be done away with?

I hold the opinion that the notion of opportunity cost "muddies the intellectual waters" so to speak, and I'd like to know if any professional economists have expressed this sentiment, or similar. ...
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1answer
156 views

Any information on a toy economy with 3 types of agents in it

I was thinking about a theoretical economy where there are 3 types of roles for the agents. They can be : workers : produce good A criminals : steal good A cops : protects good A without going into ...
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1answer
185 views

What term/theory describes more efficient utilization of a resource?

I may be asking the wrong question here, but I wonder if there is a term/theory that describes/studies the evolution of an economy that continually improves the utilization and allocation of certain ...
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1answer
296 views

How is signaling theory different from cue utilization theory?

I think they are quite similar. I am a bit confused. Can anyone explain this to me? I got the name and the information about the cue utilitarian theory from a journal article that related to organic ...
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1answer
100 views

Will the goods market be in equilbrium along the AD curve?

This is a question which was asked in the entrance to Jawaharlal Nehru University's (New Delhi) entrance for their post-grad program specializing in International Economics in 2014. Which of the ...
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2answers
167 views

Why the total value of the whole economy is constantly appreciating?

Take S&P for example. In the long run it just keeps climbing. Same for the market as a whole. Why would this happen? Why the market keeps going up (in the long term) all the time? (source)
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1answer
155 views

Is Capitalism dying or will it prevail? [closed]

During the last decades there has been an increase of anti-capitalistic movements around the world which are fundamentally different from those of the XIX-th and XX-th centuries in the sense that they ...
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1answer
89 views

Looking for the title of a short (~100 page) Herbert Simon book about “Bread-bricks”

I'm trying to find a short (~100 page) book by Herbert A. Simon in which he presents a simplified economics in which there is only one item of value and it is called the 'Bread-brick'. One can eat a ...
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1answer
76 views

Derive marginal productivity conditions in DW Jorgenson paper

I'm reading Jorgenson, Dale W. (1963), "Capital Theory and Investment Behavior", American Economic Review. Vol 53, No. 2, pp. 247-259. http://www.jstor.org/stable/pdfplus/1823868.pdf I would like ...
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1answer
320 views

Intuition behind the linkage principle

An important result in auction theory is Milgrom & Weber's linkage principle, which, roughly, holds that the expected revenue from an auction is higher is the seller commits ex ante to reveal as ...
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304 views

Does economic theory support the notion that the wealth of the wealthy is based on the poverty of the poor?

Almost any discussion about poverty and wealth and income inequality at some point includes arguments based on the premise that the wealth of the wealthy is causally related to the poverty of the poor;...