All Questions

0
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0answers
1 view

Societal benefit of Securitisation (eg Asset Backed Securities)

I was reading about the benefits and harms of securitisation. A research piece suggested "Reducing overreliance on the banking system" with 2 sub-points: Corporates can access to the funding sources ...
0
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0answers
4 views

Accounting of common stock and capital surplus for banks

I am trying to understand the accounting involved with bank capital and am a bit confused about the common stock and capital surplus lines on balances sheets. I would like to know if the following ...
0
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0answers
10 views

Predicting long term asset returns

I am currently trying to form an overall asset allocation strategy which combines base strategic allocation and tactical shifts. My model already incorporates the tactical shifts using various factors ...
5
votes
1answer
21 views

Why are Hicksian demand curves unobservable

I have read this paragraph in a book (Jehle, Reny: Advanced Microeconomic Theory): I don't quite understand why Hicksian demand curves aren't directly observable? What does observable stand for in ...
-3
votes
0answers
19 views

Cost-Minimization Problem [on hold]

Given the production function: f(x,y)=3x+y Price of x=12, price of y=3 What is the total cost of producing 20 units of output? Answer: $60 How do you solve this using the Largrange method?
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0answers
24 views

Production technology and efficiency

I have been practicing some questions on production function and efficiency and I came across the following questions. For question 1 what I did is, the efficiency of firm A in q1 = production of ...
0
votes
1answer
32 views

Does a drop in GDP per capita, with the population staying around the same, mean people on average are poorer?

Essentially, I'm trying to determine if there is a correlation between a drop in GDP per capita (e.g. during the 2008 financial crisis, Australia's GDP per capita dropped from USD \$49,000 to $42,000 ...
0
votes
1answer
12 views

Leveraged Return on Investment

A general return on investment (ROI) formula is: \begin{equation} \text{ROI}=\frac{\text{Net Profit}}{\text{Total Investment}}. \end{equation} But if you think about an investment that requires some ...
1
vote
1answer
23 views

Gross interest rate ($R$) v. Net interest rate ($R-1$)

I am reading a macro-finance article that deals with asset financing. While it defines the gross interest rate to be $R$, it defines the net interest rate to be $r\equiv R-1$. In equilibrium, the ...
0
votes
1answer
23 views

Why are mortgage rates in USA so high compared to Europe?

What are the main reasons of high mortgage rates in USA compared to central Europe? In central Europe mortgage rates are about 75%-100% lower than in USA.
1
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0answers
15 views

Is There a Good Companion for Theory of Moral Sentiments

I am reading "The Theory of Moral Sentiments" by Adam Smith. There's a lot of technical, and/or dated language. Is there a good companion to read this with?
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0answers
13 views

Calculating returns and portfolio returns

I am struggling to understand when returns are additive and when they are not. I thought discrete returns are multiplicative, but not additive. However, now I created a simple example for myself on ...
0
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0answers
6 views

Factor cost market price basic price

Sir Basic price = Factor cost + net production tax Market price = Basic price + net product tax Then how do we say that market price is factor cost + net indirect tax? Only product tax is a part of ...
2
votes
1answer
47 views

Confusion about multiple information Sets

I'm confronted with the following situation: First of all nature decides which of two games is played. Then each of two players make a simultaneous move, but only player I knows which game is played....
2
votes
1answer
18 views

Do mainstream economic models use the blank-slate view of humans?

Human capital is an important part of GDP forecasting. Do the models in use today view humans as "blank slate", meaning they can be educated to the same level, or do they take into account ...
2
votes
1answer
49 views

AGV mechanism and Individual rationality

I have the following question. I consider AGV mechanism which is as follows: $u_i(x,\theta_i) = v_i(k,\theta_i) + t_i $ is an utility function where $x = (k,t_1,...,t_n)$ vector of alternatives. There ...
-1
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0answers
15 views

What is the relation between importance weights and utility functions

I usually read them as two different things but I believe they are somehow related. In importance weight, every attribute $x_i$ has an importance weight $w_i$ while in utility function every choice is ...
0
votes
1answer
15 views

Why the source profit is not only trade markups?

I'm researching the source of profit. In Marx I've found the following passage: If then, speaking broadly, and embracing somewhat longer periods, all descriptions of commodities sell at their ...
0
votes
2answers
29 views

Why is common stock included in bank capital?

Capital represents the loss-absorbing capacity of a bank. I do not understand how shares issued in the past provide any indication of a bank's loss-absorbing capacity. I understand that common equity ...
-2
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0answers
20 views

What if fascists win? [on hold]

What is a Fascist economy? Why Did Musolini say he contorleld 3/4 of the state economy? Perhaps there a reason. Or not, maybe so.
-1
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0answers
35 views

Free trade and people pouring scorn on economists [on hold]

https://www.theguardian.com/commentisfree/2015/oct/11/nobel-prize-economics-not-science-hubris-disaster Somewhere on the internet I run into a text like the one above. Stating that while economists ...
0
votes
1answer
12 views

Free Disposal: the production set less the vector space of positive reals

In Microeconomic Theory (3rd Edition), Mas-Collel, Whinston and Green state that the property of free disposal implies the following: $Y - \mathbb{R}^L_+ \subset Y $ Y: Production set y: Production ...
0
votes
1answer
14 views

Name for a tax that captures all goods and services produced?

Is there a name for a consumption tax that basically captures the GDP (all goods and services produced in the nation)?
3
votes
1answer
35 views

The notions of Bayes Correlated Equilibrium and Bayesian Nash Equilibrium in a game with one player

I would like your help to use the correct terminology to define a Bayes Correlated Equilibrium (BCE) and a Bayesian Nash Equilibrium (BNE) in a "game" with one player. The notion of BCE in an $N$-...
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0answers
18 views

Does the gravity model of trade apply equally for goods and services?

Does the gravity model of trade apply equally for goods and services? Naively it would seem that the more ephemeral services would be less impacted by it?
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0answers
13 views

Nominal and real government expenditure

I just need to know that how to make a data series of real government expenditures using nominal government expenditure data series.
2
votes
1answer
54 views

Facebook's Libra - Why would it vary in value

Facebook has come up Libra its version of crypto-currency. The unique feature of Libra is the "reserve" which backs Libra. The reserve is supposed to be held in stable global currencies (USD, GBP, ...
0
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1answer
36 views

Why do prices go up when the central bank increases money supply?

From my understanding, when the money supply curve shifts to the right, interest rates go down, it follows that the price level decreases and the prices should go down? Thanks in advance.
0
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0answers
7 views

How to interpret the (expected) exposure and CVA of an option or a single share

I have a quick (hopefully simple) question regarding the interpretation of the expected exposure of a call option and a single share. I've done some computations on the formula for the expected ...
0
votes
1answer
30 views

How would one take advantage of this arbitrage opportunity?

I have a quick question about how arbitrage works. Let's say that there are two investments: Invest in a two-year zero Invest in a one-year zero and then reinvest into a forward contract from year ...
0
votes
0answers
14 views

Should I include lags in an LLC unit root test?

I have panel data (N = 10, T = 20), which I intend to run a series of regressions on. I first want to see if my data are stationary in levels or in differences. To do this, I have been performing ...
0
votes
1answer
41 views

How can capitalism be improved? [on hold]

Many people want to try socialism because of valid criticisms of capitalism. So, are there any good ideas on improving the problems of capitalism before we go down the path of socialism?
0
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0answers
6 views

Currency board, why the fluctuation in local currency

I have very basic question about currency boards: Assume that a country floats a new local currency "N" with the currency board model. It uses USD as the reserve currency. To begin with 1 N = 1 USD. ...
0
votes
4answers
53 views

Bandwidth, latency and price

Can a market be seen as a set of nodes (market actors) connected by edges with bandwidth and latency characteristics? Are these terms used in economics? If so would an import tariff affect bandwidth ...
-1
votes
1answer
25 views

Can there exist something that subsidises that is not a subsidy

Is the set of subsidies exactly the same as the set of things that subsidise? Put another way: can there exist something that subsidises that is not a subsidy? Or are there two definitions of a ...
0
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0answers
25 views

By what mechanism do large economies affect world price with tariffs?

Large economies can affect world prices by applying import tariffs. Is this because they definitionally comprise a substantial portion of global consumption, and hence by shifting production ...
-1
votes
0answers
25 views

Upper bound on wealth that can be created for each country

I get very confused on the subject of wealth and I do not, I repeat, I do not have the time to read Adam Smith. And I have no formal training in economics. As a layman, I wish to ask a simple question....
1
vote
1answer
30 views

Asymmetric (in sign) cross-price derivatives in consumer-theory problem

I'm puzzled why, in the following optimal-choice problem, good $x$ depends on price $p_y$ but the opposite is not true. Should not the sign of $\frac{\partial x}{\partial p_y}$ be the same of $\frac{\...
4
votes
1answer
47 views

How should the government react to 50% of the population being wiped out?

In Avengers Infinity Wars the villain snaps his fingers and wipes out 50% of all living creatures. His rationale is that it will save people from starvation and collapse due to resource exhaustion in ...
0
votes
1answer
15 views

Expected Income Question

An urn contains equal number of green and red balls. Suppose you are playing the following game. You draw one ball at random from the urn and note its colour. The ball is then placed back in the urn, ...
0
votes
1answer
33 views

Industrial Economics

I am currently struggling trying to find the short-run equilibrium price, output per firm, and profit per firm if $190$ firms supply the market. I am given $p=102-1/2Q$ and $C(q)=5q-6q^2+3q^3$. ...
0
votes
2answers
36 views

In what kind of economic environment would the cliche of “keeping money under the mattress” be warranted?

I'm trying to apply (ideally empirical-backed) economic theory to an age-old cliche. We must be very articulate about the assumptions, because if it's a total collapse of the dollar, then that ...
0
votes
0answers
19 views

Would a perishable currency work in a financial crisis today?

I read about perishable currencies in the following article Now my question is if there have been any studies on this and if this may work in modern financial markets?
0
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0answers
22 views

Does quadratic voting fall victim to gibbard's theorem?

Does quadratic voting fall victim to Gibbard's theorem?
1
vote
2answers
43 views

Do real life economists and financial analysts actually use calculus in their jobs?

From what I understand a lot of calculus is used at university level when studying economics and some finance courses (correct me if I'm wrong) but I was just wondering if economists and financial ...
0
votes
1answer
15 views

Is the Paradox of Value relevant to the value of labour?

I trust we're all familiar with the Paradox of Value -- that queer state of affairs in which diamonds, which are not good for anything, are very expensive, while water, which we all need to not die, ...
2
votes
2answers
59 views

Do recessions matter?

One common definition of recession is "two consecutive quarters of negative GDP growth". GDP growth affects other variables, such as stock prices, interest rates, unemployment, and personal income. ...
0
votes
1answer
13 views

What counts as transactions fee in Coase Theorem?

Coase Theorem says that if the transaction fee is negligible then we will have an efficient allocation of resources. In some of the samples, they quote that it doesn't matter who has the right to ...
0
votes
1answer
45 views

What are the economics of bike sharing companies?

Bike sharing seems to have originated in China. And it has spread to the UK. And at least a decade on it continues to spread into the provinces. So it has longevity. So what are the economics of ...
-3
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0answers
11 views

What is the equilibrium income (b) calculate trade balance (c) what is the value of foreign trade multiplier

An economy is characterized by the following equations c=60+.9y^d . I=10. G=10. t = 0 . x=20 . m=10+ .05y

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