# All Questions

7,512 questions
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### Mixed Strategies — Does this lead to Nash equilibrium?

I have a simple payoff matrix defined here: https://prnt.sc/m6rp5m My question is: If both players play all 4 strategies with 1/4 probability, does that lead to nash equilibrium? I can't quite ...
27 views

### National income referred as GDP?

National Income is the total value of all services and goods that are produced within a country and the income that comes from abroad for a particular period, normally one year. Gross Domestic ...
23 views

### Specific question about some figures in national accounts

I have highlighted four highlighted numbers in the UN System of National Accounts (p. 31, Table 2.13). My question is: What are these numbers? My guesses: 6 = Compensation paid by foreign firms to ...
7k views

### What's the difference between gross fixed capital formation and gross private domestic investment?

Cited from Wikipedia, we know: Gross private domestic investment is the measure of physical investment used in computing GDP in the measurement of nations' economic activity. This is an important ...
9 views

### production possibility frontier [on hold]

A simple economy has 100 workers and produced only two goods-coffee and doughnuts. labour is the only factor of production , but some workers are better suited to production coffee than doughnuts and ...
12 views

### Disequlibrium and government intervention? *CONFUSED*

I would like to ask about what are the specific examples or conditions of disequilibrium in an economy with Government Intervention, I am new student that just got started to learn economics and I am ...
15 views

### Calculating expected tenure of a customer

In his How To Project Customer Retention, Fader computes the expected tenure of a customer according to $$E = \sum_{t=0}^{\infty}S(t)$$ where $S(t)$ is the Survival Function. From a purely ...
9 views

### Quantitative easing

Quantitative easing is an unconventional monetary policy in which a central bank purchases government securities or other securities from the market in order to lower interest rates and increase the ...
41 views

### Using the sample mean to test hypotheses

Suppose that we have some data-points $x_1, ..., x_n$ and want to test a model that specifies a stochastic process which supposedly generated the data points. For example, we might want to test the ...
9 views

### Optimal Top Marginal Tax Rates

Some of you might know of US politician Alexandria Ocasio-Cortez, a member of the Democratic Party as well as the Democratic Socialists of America. In a recent interview she had on 60 Minutes, she ...
16 views

### How to derive optimal labour supply from utility?

I am struggling with this question: An agent's utility is U = log(C) - 2L2 (where log(C) is the natural logarithm). The agent produces their own output with a production function C = Y = AL^α, where ...
13 views

### Why is the labor demand measured by the wage bill?

Does it imply the assumption that there is never an excess demand for labor? And so we can measure labor demand as an equilibrium value, the wage bill. Reference: In the introduction of this paper (...
15 views

### Difference-in-differences with long time horizon and repeated treatments

I have a high-frequency panel dataset on the order of $i=150$ and $t=5000$. I am interested in studying the causal impact of a treatment with the following characteristics: The same unit can be ...
38 views

### Rigorous solution of Stackelberg leader-follower game with N-players?

In the classical two-player Stackelberg game (sequential Cournot) we have a linear demand function $P = 1 - Q$ where $Q = \sum_0^2 q_i$, and we assume homogenous production cost $c$. By starting from ...
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### How to calculate Tobin's Q as a measure of banks' performance?

Basically, my question is regarding the calculation of book value of assets in tobin's q formula.
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### Are these papers correctly identified by the economic evaluation?

Cost Benefit Analysis https://www.ncbi.nlm.nih.gov/pmc/articles/PMC1767465/ https://www.thecommunityguide.org/sites/default/files/assets/massmedia_AJPM1.pdf Cost Effectiveness Analysis https://...
13 views

### Microeconomics Mechanism Design Question

How would I solve e, f and g here? Is it valid to have a direct mechanism where only B is the participant and the outcome function only depends on B's announcements, then we try and force truthful ...
28 views

### Isn’t a zero-coupon perpetual bond not worthless if the relevant government has some probability of buying them back?

A government issues perpetual bonds with no interest payments, no coupons: Most economists that are not hyper-dovish would argue such a bond is intrinsically worthless. However, if a government were ...
45 views

### Competition and welfare - empirical evidence

Consider the following claims: less competitive markets deliver worse outcomes for consumers, less competitive markets deliver lower social welfare, less competitive markets deliver higher prices/...
35 views

### what is $b(p)$ in the Almost Ideal Demand System?

In Hal Varian's Microeconomic analysis (page 213) he discusses the Almost Ideal demand system. There he describes the AIDS system as follows: The almost ideal demand system (AIDS) has an ...
27 views

### Transformation of random variables and second order stochastic dominance

Suppose X and Y are two random variables where X SOSD Y. Let g(•) be a monotonic function and X'=g(X) and Y'=g(Y).Under what conditions of g, X' SOSD Y'? I know if g is linear SOSD property is ...
21 views

### Monetary vs. Market Economy

I am having a hard time understanding the following passage from "The End of Alchemy": A capitalist economy is inherently a monetary economy, and, as we shall see, a monetary economy behaves very ...
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### Example of a rational and continuous preference relation that does not admit a utility representation

It is well-known that a rational, continuous and monotone preference relation $\succeq$ defined on $\mathbb{R}^L$ admits a utility representation. I would like to understand why monotonicity is ...
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### 《Free to Choose》 many fields and methods of encouraging freedom and competition in the book ，why they are still rarely implemented today?

《Free to Choose》Book by Milton Friedman and Rose Friedman，has been published for almost 40 years. many fields and methods of encouraging freedom and competition in the book ，why they are still rarely ...
45 views

### Paying Filipino workers in USD. What should the inflation rate be?

I'm not sure where to ask and, since this is not Personal Finance, I'm gonna ask it here. Here's my situation: for the past 2 years, I hired and trained a team of Filipino workers. They are paid in ...
19 views

### Are there more historical examples of big change in prices thanks to demand/supply changes like the tulip mania?

I'm currently searching for historical changes in prices as a result of a big/sudden change in demand/supply, like the tulip mania in Holland. Are there any notable examples?
9 views

### Microeconomics mechanism design [on hold]

How would I go about solving e, f and g in this question:
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### Economic interpretation of a CES production function

I am following a paper where a production function of this type is used. $$Y=\left [\beta K^{- \rho}+\alpha \eta \left (\frac{K}{L} \right )^{-c(1+\rho)}L^{- \rho} \right ]^{-1/\rho}$$ It is a ...
23 views

### A utility function that gives a regressive tax rate

I see some discussion that the reasoning for the construction of a tax rate function is the utility function. Whould $u=\ln\ln w$ function where $u$ is the utility and $w$ the wealth give a regressive ...
14 views

### bonus of productivity sanction good workers because of bad ones?

if we use the definition of workers productivity as value added by employee when this value is not good so no bonus is given to employees like that we are not sanctionating good workers because of bad ...
33 views

### Consumption smoothing in RBC Model

I have the following inter temporal utility function: $U(t)=(\frac{s(t)}{1-\sigma})(c_t/c_{t-1}^\gamma)^{(1-\sigma)} - \chi*h(t)$ where $h(t)$ is the hours worked. I know that gamma is responsible ...
27 views

### Treasury Bond Default

I was listening to a podcast featuring Michael Lewis (author of Flashboys / Moneyball), who mentioned a Blackswan scenario where the administration would threaten to selectively not pay its Treasury ...
24 views

### log returns in fianance

Why are log returns used in finance? For example to calculate a stocks performance. There are a lot of articles on that topic yet I don't find them very helpful. Could somebody please explain step by ...
6 views

### Nash Equilibria in Target Destroying-Guarding Game

Army A has a single plane which can strike one of three possible targets, A, B and C. Army B has one anti-aircraft gun that can be assigned to one of the three targets to guard it. The value of each ...
49 views

### Would this alternative monetary and tax system work?

Consider a nation whose money is entirely digital (like Bitcoin), but centralized (unlike Bitcoin). Furthermore, the total money supply is fixed, i.e. money cannot be created nor destroyed. To be ...
75 views

### What is a “modified IS-LM framework”?

Recently in a test I was asked to describe the modified IS-LM framework. I assumed I was being asked the IS-LM-BP model, since it modifies the traditional IS LM model by adding a BP curve. I looked ...
426 views

### Elasticity and logarithms

Let's consider a relationship between $y$ and $x$, $y = a x^b$. Taking log on both sides, we have $$\log y = \log a + b \log x$$ Now, my textbook, Nicholson and Snyder's Basic Principles and ...
32 views

### Homothetic preferences from indirect utility

Consider an indirect utility function on the form $v^{i}(\textbf{p},w^{i}) = a^{i}(\textbf{p}) + b^{i}(\textbf{p})w^{i}$ Where $\textbf{p}$ is a vector of prices and $w$ denotes income of ...
7 views

### Inflation risk premium: consumption growth and stochastic discount factor relationship

I am trying to figure out the logic that lies into the concept of inflation risk premium. I have a well understanding of the definition: compensation demanded by the bond investor for being exposed to ...
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### Bayesian game and the set of types

In a finite Bayesian game, in most textbooks, a type of player $i$ is defined as $\theta_i\in\Theta_i$. Little is said about the "nature" of the set of types. For example, could we have a two-element ...
18 views

### Why bonds held by foreign investors is greater than total bond issued?

Total bond issued is reported by BIS debt securities data. Let BIS denote this amount. Bonds held by foreign investors is reported by Balance of payment statistics (IMF). It is the portfolio debt ...
49 views

### Where do Montenegro and Kosovo get their euros from?

Both Montenegro and Kosovo have unilaterally (?) decided to use euros as their official currencies. I think that most of their capital exists only as records in bank registers, so there is not much ...
32 views

### Why did it take so much QE by the ECB to raise the Eurozone inflation to 2%?

From 2015 to 2018 the ECB increased the money supply by around 20% (around 6% y/y), with a GDP increase rate under 1%. Yet the inflation rate remained under 2%. A back-of-the-envelope calculation ...
124 views

### Heckscher-Ohlin trade model with non-homothetic preferences

$U^j = \prod^N_i \left(d^j_i-\bar{d}_i\right)^\oint$ where $d^j_i$ is the per capita consumption of good $i$ in any country $j$; $\bar{d}_i \geq 0$ denotes the minimum consumption of each good $i$, ...
22 views

### How purchasing power reduces when currency is commodity money(say gold)

First of all I am new to Economics. I'm a B.Sc.(Mathematics) final year student. I was curious to learn Economics so I started with "Economics in one lesson" by Henry Hazlitt. In this book I ...
Suppose a utility function $u=x_1^ax_2^b$ with $a+b=1$. The following formula finds the values for $x$: $x_1 = \frac{am}{p_1}\\ x_2 = \frac{bm}{p_2}$ But what if the utility function looks like \$u=...