All Questions

1
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1answer
25 views

How to build a Social Accounting Matrix from an Input-Output Table?

I built an Input-Output table (IOT) with the industryXindustry format because I thought it was a building block to build a social accounting matrix (SAM). But now I realize that I can't transpose the ...
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
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 ...
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.
0
votes
0answers
23 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 ...
4
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 ...
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
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 ...
1
vote
2answers
48 views

Is there a standard methodology for calculating real prices?

Is there an established professional standard used by economic / financial institutions for including or excluding i) the starting year/period, and ii) the end year/period when calculating real prices ...
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 ...
1
vote
1answer
59 views

Theories relevant 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?
0
votes
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 ...
-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?
1
vote
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?
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, ...
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 ...
0
votes
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
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 ...
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....
0
votes
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 ...
0
votes
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.
3
votes
1answer
560 views

What happens when I leave out empty cells in regression?

I'm using Stata 14.1 to do a regression, and I got a matsize too small error. It gave some more output to tell me possible reasons for this problem, and I think ...
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 ...
2
votes
2answers
708 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.
-1
votes
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 ...
1
vote
1answer
113 views

bonding curves and the market

This question is related to economics on the blockchain. Bonding curves are becoming popular; however, it is a bit concerning that the price on an asset is predetermined by a mathematical function. ...
1
vote
6answers
1k views

How does printing money cause inflation?

I've had this doubt for a long time and I still can't find a proper answer to it. Most answers I get just partially explain the phenomenon of a general increase in price level. I want to understand ...
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 ...
-1
votes
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 ...
-2
votes
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.
4
votes
3answers
214 views
+100

The economics of a “no deal” Brexit

A "no deal" Brexit is presented in negative terms. In such a scenario the UK would set tariff schedules in line with trade strategy and protect domestic industry/agriculture with tariff rate quotas. ...
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 $N$-...
1
vote
3answers
97 views

Perfectly competitive firms. Economies of scale

My textbook says the following: "Perfectly competitive markets only achieve productive efficiency if you assume that there are no economies of scale in the industry." Why is this the case? And by "...
0
votes
1answer
56 views
+50

Can tariffs be said to subsidise domestic industry?

If a state places a tariff on a good, domestic manufacturers of that good become more price-competitive in the domestic market at the expense of overseas suppliers. Could this be said to be a policy ...
1
vote
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?
0
votes
1answer
44 views

Quantity theory of money

Suppose the velocity of circulation (V) is constant. Annual growth rate of real GDP is 5%. The money supply grows by 14% per year. Use the quantity theory of money to calculate the inflation rate. My ...
0
votes
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.
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
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 ...
3
votes
3answers
70 views
+50

Is protectionism more suited to large economies?

Large economies like the US and China use tariffs as trade weapons while retaining competitiveness because they have the critical mass to encapsulate supply chains and avoid the cost of cross-border ...
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 ...
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
votes
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
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 ...
0
votes
1answer
40 views

Sequential game equilibrium strategy question

The question asks for player B's equilibrium strategy, hence shouldn't player B choose the strategy that gives the highest payoff after player A's move? Why does player B choose 4 over 5 and 6 over 8 ...
-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 ...
1
vote
3answers
117 views

Bank Runs During the 1930s

Why were there numerous banks run right after the stock market crash of 1929? Why would a bank fail because the stock market crashes?
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 ...

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