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4 views

Stackelberg Oligoploy Model

Question is: "Does first mover advantage depend on the assumption of complete information?" Really need some help please, thanks
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0answers
7 views

What is the Cantillion Effect?

I typed Cantillion Effect inside the Economics Stack Exchange search bar and got zero results. Anyone able to answer what the Cantillion Effect is?
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0answers
3 views

Waiting time question in M/M/n queues

Given a system in which a M/M/n queue tries to serve incoming demand. The demand for a service arrives according to a given distribution; the service time for each server follows the same distribution....
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2answers
26 views

How to prove that a function is a positive montone transformation

Consider the utility function $$ U(x_1,x_2) = x_1^\alpha x_2^\beta $$ for $0 < \alpha, \beta < 1$. How do I then show that $$ V(x_1,x_2) = F(U(x_1,x_2)) = \frac{\alpha}{\beta} \ln(x_1) + \ln(...
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0answers
3 views

Overlapping generations model with altriusm basic FOC

I'm working in the OGM with altruism as proposed in Salai's and Barro's book, specifically the problem is: Max $U_t=\sum_{i=0}^{\infty}\large(\frac{1+n}{(1+\rho)(1+\phi)}\large)\large[u(c_{1t+i})+\...
2
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2answers
89 views

How does 'building land' fit into economic modeling?

According to the ONS National Accounts 2018 & RICS land valuations and ... Land that is built on has a value that makes it half of the UK's wealth. The rest of the land has a value less than 3% ...
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0answers
4 views

Depreciation of currency shall incentivise or disincentivise the foreign portfolio investors?

I am confused - if suppose currency depreciates then assets will become cheaper and foreign investors will find it enticing to buy these assets so in that case, foreign inflows shall increase In ...
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0answers
6 views

How can I tell who are major investors in an asset management group and their associated funds?

I am trying to determine which individuals/organizations are the largest investors in Netflix, but when I look at the list of top shareholders, they are all investment management groups. Investment ...
2
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2answers
51 views

What happens when a country's central bank significantly reduces the available currency?

The central bank of Iraq has significantly reduced the note count from 55 Trillion to 5 trillion. Logic would dictate that when a supply is reduced the value of the item that has been reduced will ...
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0answers
10 views

What is data trapezoid form?

For one of our class project we are required to do the following: Download U.S. real GDP in data trapezoid form (vintages) I tried to search online for what does the data in trapezoid form means ...
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1answer
53 views

What does the adjective “structural” mean in “structural reforms” or “structural effects”?

Economists frequently speak of structural reforms and structural effects. For example, Manmohan Singh (1992): The economic crisis was used as an opportunity to implement basic structural reforms ...
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22 views

Why does US Treasury Bond Futures Chart show two separate curves?

I was surprised to see following on Yahoo Finance. Why did the chart branch into the green and orange functions? Does the chart show 2 separate prices on the chart?
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2answers
428 views

What's quantitative easing?

From what I understand after reading mainstream media, quantitative easing increases the supply of money in the economy without direct government spending (fiscal policy). It seems to have all the ...
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1answer
43 views
+50

Why can per share earnings growth only keep up with GDP growth, if no new shares are issued?

I transcribe Ben Felix's speech (BSc Mechanical Engineering (Northeastern University), MBA Finance (Carleton University), CFA, CFP, CIM) starting from 8:33. I just screen shot his animation, rather ...
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0answers
19 views

Is this naive population projection method correct?

For reasons that would be too long to explain here, I need to come up with a world population projection under the assumption that age-related deaths are either entirely eliminated or anyway ...
2
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4answers
201 views

How can people save in a equilibrium economy?

Two people on a desert island: John produces 100kg potatoes and sells them to Paul for \$100. Paul catches 100kg fish and sells it to John for \$100. GDP is \$200\$, right? Next year, they improve ...
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0answers
16 views

Purchasing a $350,000 house [closed]

Assume you are interested in purchasing a $350,000 house with the following characteristics: 80% Loan to Value Loan @ 4% interest (30yr, fully amortized) Property taxes = 1.2% of purchase price per ...
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1answer
29 views

Extended game mixed SPNE

I have doubts about whether my solution is right. Let $x>z>y>1$. Given the extended game above, we have two subgames and will find the Nash equilibria of these. Observe that player 2 will ...
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0answers
8 views

A loan with the following terms is being made

1) A loan with the following terms is being made: • Fixed rate, constant monthly payment. Closing date February 9th. • 9% interest rate • $70,000 mortgage loan amount. • $1,500 loan discount points ...
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0answers
24 views

Does the negative economic shock caused by the covid pandemic can increase mean productivity?

Countries in the middle income trap often have trouble with capital and technological accumulation, informal labor market, institutional deficiencies, low productivity, etc. If firms in those ...
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0answers
20 views

Can one use the standard deviation of a variable as a regressor?

I am wondering if you could use the standard deviation of a variable as a regressor in an econometrics model? Consider the following hypothetical model: $$y_{it} = \alpha_0 + \alpha_{1}T_{it} + \...
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1answer
28 views

Cause of the Bubble Phase - Spend More Than You Earn

I am a big admirer of Ray Dalio. In his book: Big Debt Crises, one chapter explains The Bubble Phase., and how it happens. Below is the quote of an scaneario in the micro level: Suppose you earn \$...
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1answer
43 views

Is anyone familiar with the following basic resource sharing model?

Here is a resource sharing model, I do not remember where I came across it, I am wondering if this is well known in econometrics. Let $T > 0$ be the total quantity of resources. For example, ad ...
3
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2answers
55 views

What does commitment in adverse selection mean?

In this slide deck, p15. it says "The revelation principle requires that the principal can fully commit to the terms of the contract. If this is not the case, an indirect mechanism, which allows for ...
1
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2answers
45 views

Is there any fundamental reason that output elasticity of capital $<1$ in general?

In Solow growth model, if one perturb the saving, there is convergence of old equilibrium capital to new equilibrium capital as investment breaking point capital is attractor. However, in derivation ...
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0answers
11 views

nominal exchange rate

During 2011 the inflation rate in Brazil was about 6.6% while in the U.S. it was about 3.3%. At the start of 2011 the nominal exchange rate was about 1.7 Brazilian real per U.S. dollar. If purchasing-...
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1answer
56 views

What defines a data generating process

Let’s say we have a certain DGP $y=c+ax+bz+ error$. I take this to mean that conditional on the values of $x$ and $z$ in a certain instance (and no additional information )the expected value of $y$ ...
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1answer
17 views

Percentage of workforce change, with two PPFs

A hypothetical economy produces two goods, X and Y. The performance (yield) for every worker is steady, and every worker for Y can produce 10 units of product. If $L_x+L_Y=200 $ (meaning that the ...
4
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1answer
135 views

Nash equilibrium for Bertrand Model with Spatial Differentiation

Consider a town with consumers represented by a closed interval $[0,2]$ with the consumers spread continuously and uniformly. There are two stores, $A$ and $B$ who sell the same product at $p_A$ and $...
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0answers
13 views

Bank lending rate & ROE

When a bank lends money to a company, does the bank (typically) demand an interest rate higher or lower than the ROE (Return on Equity)? I have always thought they demand a higher interest rate but I ...
9
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4answers
1k views

Mortgage loans from foreign banks at lower interest rates

I had a thought - what if I live in a relatively poor country like let's say Russia and I would like to buy a house. In order to do that, I need to take a mortgage loan. In Russia however, interest ...
0
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1answer
25 views

GDP Discrepancies

I'm trying to practice reading economic data from FRED and BEA websites, but they seem to be providing conflicting data that I cannot understand at all. For example, looking at Real GDP percentage ...
2
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3answers
97 views

Could a bank simply eliminate a loan from its books?

Assume a bank gives a loan to Mr X. for, say 100. The bank's assets (account "loans") increases by 100, and its liability (account "deposits") also go up by 100 (which is the extra 100 added to the ...
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1answer
68 views

LS book (Recursive Macro Theory). Chapter8: Complete Market

I am reading LS book, on Chapter 8 - Complete Markets (3rd version). There is an example on page 264 that I am quite confused. I attach the picture of the example here under. I don't understand why ...
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2answers
123 views

Does the Lucas (1978) asset pricing model feature complete markets?

The Lucas (1978) asset pricing model seems to be one of the workhorse models in finance / asset pricing models. It also seems to be the case that the environment, with claims to $n$ (exogenous) ...
0
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1answer
37 views

What does it mean when we talk about “same basket” exactly for both GDP and CPI?

When we say about "the basket used for calculating the CPI is the same as the composition of GDP" What does it mean the "same basket"? Does it just mean the goods and service are the same but the ...
1
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1answer
21 views

Understanding GDP Chart

When I Google "GDP of 1950", I get ~$300 Billion. Looking at the graph @ https://fred.stlouisfed.org/series/GDP . I see Q1 280 billion Q2 290 billion Q3 308 billion Q4 319 billion My questions: ...
1
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1answer
34 views

What is the result of the Bellman Equation

I'm just starting with dynamic optimization and although I understant the proof's of the theorem I'm not able to fully understand whether the bellman equation is a function , a function valuated at ...
2
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1answer
44 views

Do large- and mid-caps try to shun low share prices?

As NASDAQ and NYSE stocks must be priced at least $1 per share, it feels intuitive and doubtless that large- and mid-caps fancy their share prices to outstrip and remain well over \$1. But what ...
3
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1answer
54 views

Trying to apply in practice the theory of finding the optimal price in a cournot competition

I recently received my bachelors degree in economics. For fun I wanted to try to apply some micro-economic theory of finding the optimal price in a cournot competition. I wanted to do this for a ...
1
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0answers
13 views

Stabilizing Property of a Taylor Rule

Considering the New Keynesian Model we have the Phillips curve and dynamic IS curve in log-linearized form with price shock $u^{\pi}$ and demand shock $u^{IS}$ :$$\pi_t=\beta E_t\pi_{t+1}+\kappa(y_t-...
2
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4answers
209 views

When a central bank buys government securities, is this exactly equivalent to printing money?

When a country's central bank buys that same country's government securities, is this exactly equivalent to printing money? There seems to be no agreement on this. Federal Reserve FAQ: Is the ...
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0answers
13 views

Example on profit function that contains the maximum of a decision and a random variable

I am looking for an example of a profit function that contains the maximum of a decision and a random variable in this form: $\max(d,X)$, where $d$ is a decision variable and $X$ is a random variable. ...
0
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0answers
10 views

What does it mean that Ontario is considering a regional approach to reopening?

I read the article Ontario now considering regional approach to reopening the province but failed to understand what it means by "the province is now considering a regional approach to reopening." I ...
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0answers
44 views

What are the calculations that policy makers do when deciding to ease a lockdown?

I have heard this question framed as making the decision between lives and the economy. But on the other hand, I also read a StackExchange discussion(I am not sure of the link), where it was shown ...
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0answers
18 views

Does combination of the paradox of thrift and the acceleration principle reduce economy to c=a level of consumption during recession?

By "c=a level" I mean situation when all consumption by households equals to autonomous spending, more or less. I assume no counter-cyclical policies(including automatic stabilizers). I also assume ...
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4answers
877 views

Is craigslist part of the Shadow Economy?

Is craigslist part of the Shadow Economy? Many if not most of the purchases that take place there are done without taxation.
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0answers
5 views

Relationship of Customer discrimination and discrimination by a firm

The following question relates to Becker's Theory of Discrimination. In the context of the question of whether a firm taste-discriminates against a minority group, I was of the opinion that the firm ...
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0answers
32 views

How do I understand the fed

I apologize if this question seems incoherent as I'm struggling to get my thoughts together. I would like to understand the Fed and their mechanisms better, and their far-reaching implications of ...
8
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4answers
815 views

Why couldn't the Karush-Kuhn-Tucker optimization find the solution?

I have the following utility maximization problem: $$\max (xy)$$ $$(x+y-2)^2 \leq 0$$ Conditions: $$y-2\lambda (x+y-2) =0$$ $$x-2\lambda (x+y-2) =0$$ $$\lambda(x+y-2)^2=0$$ When I set $\lambda>0$, ...

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