All Questions

-1
votes
1answer
23 views

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 ...
1
vote
2answers
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 ...
0
votes
1answer
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 ...
2
votes
1answer
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 ...
-2
votes
0answers
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 ...
0
votes
0answers
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 ...
0
votes
1answer
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 ...
0
votes
0answers
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 ...
2
votes
2answers
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 ...
1
vote
0answers
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 ...
-1
votes
1answer
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 ...
1
vote
0answers
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 (...
1
vote
0answers
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 ...
1
vote
1answer
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 ...
1
vote
0answers
7 views

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.
-1
votes
0answers
11 views

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://...
1
vote
0answers
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 ...
0
votes
1answer
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 ...
8
votes
1answer
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/...
3
votes
1answer
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 ...
2
votes
0answers
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 ...
0
votes
1answer
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 ...
0
votes
1answer
27 views

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 ...
0
votes
0answers
16 views

《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 ...
1
vote
1answer
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 ...
0
votes
1answer
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?
-1
votes
0answers
9 views

Microeconomics mechanism design [on hold]

How would I go about solving e, f and g in this question:
0
votes
0answers
24 views

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 ...
1
vote
1answer
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 ...
0
votes
0answers
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 ...
0
votes
1answer
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 ...
1
vote
1answer
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 ...
0
votes
2answers
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 ...
0
votes
0answers
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 ...
-1
votes
1answer
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 ...
1
vote
1answer
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 ...
3
votes
2answers
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 ...
2
votes
1answer
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 ...
0
votes
0answers
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 ...
1
vote
0answers
12 views

Supply elasticity on a piece-wise linear supply function

The supply elasticity at a point is the willingness to produce more or less after the price has changed (due to whatever reason?). $$\mu_{Q,P}=\frac{\partial Q_S/Q_S}{\partial P/P}=\frac{\partial Q_S}...
7
votes
3answers
6k views

What happens to a country with lot of debt?

What happens to a country with lot of debt? As far as I know, debt is a way to get hands on extra money which will put burden on the future governments. What if every successive government keeps ...
-1
votes
0answers
20 views

Calculating of the price, quantity and profit of a cartel

I am struggeling with a problem while learning microeconomics. We got two different functions: $$p_1=10-2x_1-x_2;\\ p_2=10-2x_2-x_1.$$ $K'(x)= 1$ for both companies. The task is to calculate the ...
3
votes
1answer
26 views

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 ...
0
votes
0answers
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 ...
1
vote
2answers
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 ...
1
vote
2answers
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 ...
1
vote
1answer
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 $i$, ...
1
vote
2answers
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 ...
2
votes
2answers
790 views

Editing formula for finding Marshallian Demand with Cobb-Douglas utility function

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=...
0
votes
0answers
29 views

Games with perfect but incomplete information in real life

It is hard to imagine such a game. Here is an example from wikipedia: Suppose you are playing a game of chess against an opponent who will be paid some substantial amount of money if a particular ...

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