All Questions

1
vote
1answer
81 views

How to determine demand without the price of a good?

If I have the utility function of an individual that exhibits perfect substitutes, think (U=ax+by), and I'm given the price of good x and the budget M, then how am I supposed to determine the demand ...
5
votes
1answer
280 views

Missing values in economic time series

I am trying to run a time series analysis on some variables - GDP being my dependent variable, and my independent variables are oil revenues, government expenditure, exports and FDI inflows. My data ...
4
votes
2answers
3k views

Why are asset pricing models equilibrium models?

I have several times heard scholars refer to asset pricing models (such as the CAPM) as a type of equilibrium model. Why exactly is this the case? Does this simply mean that equilibrium is a necessary ...
4
votes
1answer
82 views

Why do there seem to be relatively few imports from India into the United States?

In the United States I see significant quantities of manufactured good imports made in Taiwan, Japan, China and Korea. However, there seem to be relatively few imports from India. Why is this?
0
votes
0answers
75 views

How is Comparative Advantage a superset of Absolute Advantage? [duplicate]

Source: 'The Theory of Comparative Advantage - Overview', Prof Steven M. Suranovic Advantageous trade based on comparative advantage, then, covers a larger set of circumstances while still ...
6
votes
3answers
939 views

Intuition behind Comparative Advantange

I already read and ask NOT about pp 52-54, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw. I understand such numerical examples that corroborate Comparative Advantage, but how can I ...
23
votes
6answers
1k views

Who exactly foots the bill if Greece defaults

Apologies if the topic is not appropriate (economics newbie here) but I am curious as to who exactly would foot the bill if Greece defaults on the ~300 billion dollars it owes. It looks like most of ...
4
votes
3answers
148 views

What does 'intelligent money' mean?

Is 'intelligent money' or 'smart money' an economic term, and if yes, what does it refer to?
6
votes
2answers
2k views

Why could China, much poorer than US, lend so much money to US?

The GDP per capita of China is only a fifth of that of US. But China has lent more than a trillion dollars to US. How could the much poorer China lend so much money? Where did those money come from?
4
votes
1answer
159 views

Markov decision processes, contractions and value iteration

I am reviewing Markov decision processes (MDP) and there is something I am missing with respect to the contraction argument. I am pretty sure it is a silly mistake somewhere (maybe computational), but ...
1
vote
0answers
378 views

Interpretation of the Impulse Response Function

I have an IRF that shows the GDP shock to GDP. Let's say I have a 5-year forecast of GDP. If there is an immediate 1% decrease in GDP today, can I adjust the original 5-year forecast by using the IRF?...
8
votes
1answer
232 views

Applications/generalizations of a theorem of Debreu

I would like to know how the last theorem in Debreu's paper "Neighboring economic agents" (La Decision 171 (1969): 85-90; reprinted in G. Debreu, Mathematical Economics: Twenty Papers of Gerard Debreu ...
4
votes
1answer
261 views

What if only the government could create money? [duplicate]

If I understand correctly, under the dominant system of fractional reserve banking, many (all?) private banks can create money by lending. See, for example, Implications of abolishing Fractional ...
2
votes
1answer
84 views

What assurances are there that the Federal Reserve does not give money to banks?

My understanding of the operation of the United States Federal Reserve Bank is that it invents dollars by a unilateral, unbalanced credit to its own account and then it loans this money to member ...
4
votes
1answer
77 views

Can one bank be the correspondent bank of itself?

http://www.investopedia.com/terms/c/correspondent-bank.asp Correspondent bank is like a delegator in a country to operate on behalf of the delegatee who doesn't normally has established business in ...
2
votes
1answer
597 views

Solow model: Partial derivative of y with respect to n

I am trying to find the derivative of $y$ with respect to $n$. All I need to do is take the partial derivative $\frac{\partial y}{\partial n}$ of the function: $sf(k) = (n+g+\delta)k$ Here is what I ...
11
votes
2answers
374 views

The Case for Basic Income in developed and underdeveloped countries

From what I can tell, the idea of the basic income guarantee is very popular in some circles as an excellent alternative to a lot of modern welfare systems. Has anybody developed a theoretic or ...
2
votes
1answer
40 views

rotating and exchanging x for y's in regression

I was just wondering what happens generally if i send all my x points to y's and y's to x's (i.e reflect along the y=x line) - if I change the x's and y's will my old error minimizing line still be ...
7
votes
2answers
540 views

Could a Cap-and-Trade and a Carbon Tax both work together as a system to reduce carbon emissions?

For example, the European Union currently has a Carbon Emissions Trading Scheme in progress the ETS which acts to cap the amount of carbon dioxide released by large corporations. However, let us ...
3
votes
1answer
53 views

Sources of free European national income and output data?

What are good free sources of European National income and output data? By this I mean, amongst others: GDP and the variations of this such as; ...
3
votes
1answer
151 views

Abenomics and the Japanese VAT tax hike

Abenomics seems to me like a straightforward and modern plan of economic reflation through monetary easing and some attempt at structural reform. While it's still early, it looks like many of the ...
3
votes
2answers
354 views

Is it possible to have a signaling game in which all players are both informed (about themselves) and uniformed (about other players)?

So far, the models of Signaling Games I have seen involve two players. One player is known as the Sender and has more information. The other player is known as the Receiver and has less information. ...
7
votes
2answers
866 views

What is the true source of dynamic(Pareto) inefficiency in OLG models?

This question confuses me for some time. My first impression is that Pareto sub-optimality is due to feature that old generations will consume everything without any incentive to trade. But after ...
6
votes
1answer
92 views

Is there a school of thought or concept that acknowledges that people aren't rational actors when it comes to economic decisions?

People are subject to all sorts of cognitive biases. For example: Advertising works, and not just by making people aware of a product, but by appealing to emotional quirks. People are subject to ...
5
votes
3answers
3k views

Are state owned enterprises really inefficient?

The typical right wing/free market argument, that leads to privatisation of government assets is that the government assets will be far more efficiently managed when in the hands of profit seeking ...
4
votes
2answers
4k views

What effect would raising reserve requirements while printing money have?

It is generally accepted, that printing money will be inflationary, as it increases the money supply without a corresponding real growth of the economy. At the same time, if the central bank ...
4
votes
1answer
78 views

Does any international organization (such as IMF) provide data on capital control / financial openness?

I've read some literature on measuring capital control / financial openness, but I am wondering if there is any data directly collected by international organizations like IMF that measure capital ...
12
votes
3answers
866 views

What benefits does Bitcoin (i.e. cryptocurrency) offer?

I really, really like moderate inflation. I live in Sweden where the interest rates just went negative because we are on the brink of deflation, and the rate of inflation we have now is far too low. ...
8
votes
2answers
1k views

List of EU banks that received state aid

Is there a list of EU banks that got state aid / bailed out since 2008 crisis? I know EU state aid commission approves the fundings to banks, but does anyone keep track of which banks are tapping into ...
1
vote
2answers
2k views

Real value of debt

The Wikipedia article for real value says In economics, a nominal value is an economic value expressed in historical nominal monetary terms. By contrast, a real value is a value that has been ...
5
votes
2answers
413 views

Why are we taking the logarithm for risk-averse decision-makers?

I'm a mathematics student learning a bit of Game theory. Many examples are given within a very economic setting and up to know I could follow most of it because they were very basic and I learnt some ...
0
votes
1answer
5k views

What does it mean when a bank is “fully loaned up”?

Please briefly explain the situation when a bank is "fully loaned up".
0
votes
2answers
44 views

Do capital goods have to be valued so that (discounted) real expected return on capital goods equal current present value of capital goods?

Let $P_k$ be the value of 1 quantity of a capital good. If one does not sell the capital good and keep it, the good provides interests. In such a case, does standard macro say that all expected ...
4
votes
2answers
162 views

What would be the defining characteristic of New-Keynsian thought?

If you had to summarize New-Keynsian thought into one paragraph, or a set of equations, what would it be?
5
votes
1answer
232 views

Fantasy football

I have an idea for a fantasy football experiment looking at three different areas of the draft. These three areas are the position of each pick and how often and what value are trades. I have dug ...
5
votes
2answers
529 views

One-shot deviation principle for infinite repeated games and dynamic programming

In a context that future return is discounted by a constant parameter, one-shot deviation principle holds for both repeated games and dynamic programming. Because, in repeated games, a one-shot ...
8
votes
2answers
566 views

Is there a way to link Berge's theorem of maximum to Envelope theorem?

Berge's theorem states Let $X \in \mathbb R^m, \Theta \in \mathbb R^n $, $f : X \times \Theta \to \mathbb R$ be a jointly continuous function, $C : \Theta \rightrightarrows X$ be a continuous(both ...
6
votes
2answers
116 views

How can I get total home values on Zillow?

I am interested in getting aggregate dollar values for listings/sales on Zillow (for the whole country summed together, for example). Unfortunately, Zillow's data page seems to only show the "ZHVI", ...
6
votes
3answers
16k views

Quasilinear Utility Functions

We know if the utility function is quasilinear (QL) w.r.t good 1, then the demand for other goods is independent of income (no income effect for goods $(2,\dots, N)$). But is the reverse implication ...
6
votes
1answer
214 views

Optimal consumption in Merton-like portfolio choice model with constant wage

My Questions Consider the following problem. It is almost identical to the classic Merton portfolio choice problem. Here I'm solving it using the so-called Martingale method. I have provided my ...
3
votes
2answers
513 views

What resources are available for learning Dynare?

What resources are available for learning Dynare? I think it'd be nice to put together a list of resources that available to those new to Dynare. I've had a little experience with it but it'd be nice ...
2
votes
1answer
673 views

Impact of government subsidy on labour supply

If the government pays a certain amount $b>0$ to every person who is not working, what is the impact of this subsidy on labour supply? How does it alter the reservation wage? Is your answer ...
3
votes
3answers
14k views

Difference between merchandise trade and trade in goods?

What is the difference between merchandise trade and trade in goods? Are they the same? If so, would total trade be just trade in goods + trade in services, aka merchandise trade + trade in services?
5
votes
1answer
246 views

Lessons From Successfully small island economies

What economic and development lessons/strategies can developing Caribbean countries learn from successfully small island nations like Singapore?
1
vote
0answers
33 views

China's Prosperity

This is my first time doing this but with respects to economic prosperity. What are some of the tools/strategies that Chinese leader such as Deng Xiaoping would have used to stimulate and enhance ...
5
votes
5answers
564 views

Why (neoclassical) economic models have no profits, unlike the real world?

Consider a simple neoclassical model of an economy populated by firms with a constant returns to scale production function, using homogeneous labour and capital. Firms are equal, and are price takers ...
10
votes
3answers
11k views

What is an example of a utility function where one good is inferior?

Say the consumer has a standard convex, monotonic preference over Apples and Bananas. (Update: I'd like the preference to be as 'standard' as possible. So ideally we have diminishing MRS everywhere ...
6
votes
2answers
344 views

Consequences to lending and value of national currency from a negative interest rate and 140-year mortgages in Sweden

According to an article at Yahoo Finance, the Swedish central bank dropped its zero interest rate to -0.1 percent a couple of days ago (the article is dated to Thursday, February 12th, 2015). Now, ...
4
votes
1answer
107 views

What can we know for sure among ambiguous impulse responses in RBC?

I'm trying to understand the section on responses to productivity disturbances in Understanding Real Business Cycles by Plossor. It seems to me ambiguity of representative agent's response in ...
7
votes
2answers
199 views

What is the usefulness of approximating an optimal decision rule that close enough to steadystate in RBC model?

I'm reading understanding real business cycle by Plosser. Here's my crude understanding: For a RBC model, the FOCs of lagrangian together with transversality condition usually forms a nonlinear ...

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