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1answer
56 views

How to approach such question of two periods and asymmetric information game?

There are two players 1 and 2, playing a two-period public good contribution game. The benefits from the public good per-period to each player is $b_1$ and $b_2$ respectively, which are common ...
0
votes
2answers
18 views

What stops the interest rates from becoming highly negative?

What stops central banks interest from setting highly negative rates? Is it only that people can take out a lot of cash and put it in a vault, or are there other reasons? If we had removed cash and ...
0
votes
1answer
16 views

France place in the eurozone in terms of prudence

When I think about the eurozone countires in terms of governments economical prudence I, as many, divide them into the northern prudent(Nordic+ Germany) and the less prudent southern(Grecce, Italy, ...
1
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0answers
5 views

How would M2 and Velocity of M2 be affected if balance sheet expansion continues long-term?

Let’s assume that the Federal Reserve does NOT discontinue injecting liquidity into the Repo market but, instead, continues a long-term policy of continuous and regular liquidity injections. Let’s ...
0
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0answers
7 views

Can minimum or subsidies or tax cuts really work? Or will resultant inflation always counterbalance such initiatives? [duplicate]

I was born at the tail end of Eisenhower era and what is clear is that the dollar does not buy what it used to and this inflation has been more or less the trend for many decades. I have yet to hear ...
0
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1answer
37 views

Why would overemployment mean that labor is used inefficiently?

If labor is being used efficiently, there is no excess unemployment or over employment. This phrase from Khan Academy struck me as quite strange. Why on Earth would over employment mean that labor ...
1
vote
1answer
54 views

Macroeconomics two period model

This is the problem I've been given. Assume the consumers’preference over current and future consumption is given by $U(c,c')=c^\frac{1}{2}*c'^\frac{1}{2}$. Further assume there is no government. 1) ...
0
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2answers
26 views

Does demand side economics only apply to manufacturing

For example, if investment falls then manufacturing falls. but there is no investment in secondary markets. Wouldn't recessions cause factories to collapse but why would they affect realtors, used ...
0
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0answers
14 views

Are interest rates low because of low aggregate demand? If so, what are the reasons for low AD?

Interest rates seem quite low in most of the western world and it looks like the market thinks this will last for a long time. 10-year government bonds in US, Canada, Australia, France, Japan, ...
1
vote
1answer
14 views

What happens to interest rates when they are already at (near) zero and the stock market crashes?

Let's say the global stock market crashes in the coming months (it's currently at an all time high in the western world). What happens to interest rates? "Usually", as I understand from my absolute ...
-2
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0answers
9 views

PPP and real exchange rate [closed]

Can someone help me with this question. It shoul be easy but i am not able to solve any of them. Thanks
1
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0answers
26 views
+50

Where to find the latest statistics of brain drain in the world?

Where to find the latest statistics of brain drain in the world? I would appreciate your suggestions.
1
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1answer
30 views

MWG Proposition 2.F.1

Is homogeneity of degree zero necessary in proposition 2.F.1? It seems like the proof does not assume homogeneity of degree zero to establish the proposition. If this is true, it seems that ...
0
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0answers
27 views

Sources to know about latest research

I wanted to keep myself aware of the latest research news and trends etc. in economics. What are some good sources (newsletters, magazines, websites etc.) for that? I did find one from Nature. How ...
1
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0answers
57 views

Experiments in Economics

Hernando de Soto in his book "The Mystery of Capital: Why Capitalism Triumphs in the West and Fails Everywhere Else" describes a series of experiments in different countries, illustrating economic ...
2
votes
2answers
57 views

Change in money supply

Suppose a bank makes a loan of $1M to someone taking out a mortgage to buy a house by crediting that person's bank account with a deposit equal to the size of the mortgage. Suppose the required ...
2
votes
1answer
37 views

What is the subgame perfect pricing policy for seller?

Suppose there is a seller S who is selling to 3 different potential customers H, M, L The good is a durable good and it's utility in terms of dollar equivalent is as in the picture below: So if H ...
0
votes
2answers
296 views

Why would higher expected inflation increase corporate earnings and dividends' rate of increase?

A Random Walk Down Wall Street (2015 11 ed). p. 125. Determinant 4: The level of market interest rates. The stock market does not exist as a world unto itself. Investors should consider how much ...
3
votes
2answers
568 views

Fast way to write out the utility optimization problem for a Cobb-Douglas function?

In my last problem set, I had to solve both the Utility Maximization Problem (UMP) and Expenditure Minimization Problem (EMP) for a Cobb Douglas utility function. Recall, Cobb Douglas is defined as $$...
1
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0answers
25 views

Shortcuts for elasticity of substitution

How can I find the elasticity of substitution (I know the definition) if I know the utility function $u(x,y)$? I know its increasing in $x$ and $y$, etcetera, and has everything else you want from a ...
0
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1answer
29 views

Why does a firm in a perfectly competitive market not need to cover fixed costs in the short run?

While studying, I came across the solution that in some cases only the produces surplus, PS, needs to be positive, however not the profit, $\pi$. That means that if $PS \geq 0; p \geq AVC$, whereas, e....
3
votes
1answer
39 views

Contract curve and Pareto frontier

Consider an exchange economy with two agents. Each agent $i \in \{1,2\}$ derives utility $u^i(x_1,x_2) \in \mathbb R$ by consuming $(x_1,x_2) \in \mathbb R_+^2$. Let $u_j^i(x_1,x_2) = \partial u^i(...
0
votes
2answers
3k views

Difference between Giffen and inferior goods. Why aren't all inferior goods Giffen goods?

What is the difference between an inferior good and a Giffen good? Are the two following definitions for an inferior good equivalent? Def 1: An inferior good is a good for which the demand decreases ...
0
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0answers
19 views

Independent sort: Fama-French 2015

While replicating the FF-2015 Size-BE/ME-OP 32 test portfolios I notice missing values in the combination Big,BE/ME 4th quartile, OP 4th quartile. I am a bit puzzled, FF say they independently sort ...
2
votes
1answer
28 views

What is the purpose of multiple regression?

For instance, consider the following regression equation $College Score=\beta_0+\beta_1HighSchool GPA+u$. We interpret this $\beta_1$as the effect of a higher High School GPA holding all other ...
2
votes
5answers
636 views

In GDP growth studies, are factors of production measured as stock or flows?

Consider the following cases: One machine (capital) is used by multiple producers within one year. For instance, farmers renting tractors from the same company. In this case, in terms of GDP, there ...
1
vote
1answer
42 views

Algorithm to find Bayesian Nash Equilibria

I am working on a Bayesian game with a finite number of players and discrete types, but the complexity of the equations is not allowing me to find the BNEs by hand. I read a paper describing ...
0
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0answers
15 views

Calculate profit when trading between more than two goods

When trading two goods (or currencies) it is relatively easy to say if you are making profit when you know the exchange rates. For example Person A trades Bananas for Person B's Apples. Person A gives ...
1
vote
2answers
48 views

Mathematic notation of scale returns

I'm having trouble with returns to scale mathematical notation which i found counterintuitive even I'm fine with its definition. Any help will be very appreciated. There are three possible types of ...
2
votes
1answer
40 views

Obvious Dominance and Milipede Games (Question to Pycia and Troyan (2019)

I stumbled over Millipede Games and obvious Dominance in the paper "A Theory of Simplicity in Games and Mechanism Design" by Pycia and Troyan. On page 12 the authors define millipede Games. They ...
1
vote
1answer
25 views

Fixed costs in the long run

Can anyone please help me understand how fixed costs in the long run are zero? In Microeconomics by J. M. Perloff, the author gives the example of a factory's rent and says that if we are talking ...
3
votes
1answer
26 views

Does one include inflation when computing elasticity?

I am attempting to compute the price elasticity of a good with the help of a time series, and am unsure whether to correct the prices for inflation. Is there a standard argument for one or the other ...
0
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0answers
11 views

Deprivation vs. Marginalization

I see many studies of poverty use 'marginalization' and 'deprivation'. What are the difference between them?
3
votes
1answer
35 views

Why don't researchers use regularized probit model?

I know that a regularized logistic regression can be done to reduce training error, but I haven't found any economics research that uses a regularized probit model, only a regular probit model from ...
0
votes
0answers
19 views

What will be the additional investment?

I recently encountered upon this question: Suppose, in an economy,autonomous consumption is Rs 100 crore and autonomous investment is Rs 60 crore. Imagine that in this economy,with every increase in ...
-1
votes
1answer
27 views

Economic move from agricultural to manufacture to service in ?what after service sector?

is there anything after service sector .in oecd nation most of employment in service sector.is there anything like post service world.
0
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2answers
40 views

Why is oil being traded in U.S. dollars?

I am trying to understand the concept of money,forex, depreciation of currency,devaluing,...(just the basic stuff). While I was reading about why oil is being traded in U.S. dollars, on the internet, ...
0
votes
1answer
15 views

How to derive substitution and income effect using Slutsky equation if we don't know which of the prices change?

We have the utility function $$U(x,y)=x + y$$ and we have to derive the substitution and income effects using Slutsky equation. But after I derive the Hicksian demand functions for e.g. x: $$h_x= \...
-2
votes
0answers
24 views

How cheap is Gold?

It's possible to measure how cheap stocks are, because we can compare asset price to its output. $$Rate = {Revenue \space \over Capitalisation}$$ And then at any given moment we know how cheap ...
0
votes
1answer
48 views

Do I understand correctly that taxation-based government expenditures allow GDP to grow?

Suppose (it's an example) GDP= $1 000 000, Marginal Propencity to Consume(MPC)=0.25, that borrowing money is an absolute taboo for our government and that said government wants to increase GDP. What ...
0
votes
0answers
13 views

Does combination of sticky prices and stagflation lead to redistribution of wealth?

Suppose there is inflation in our country, but some prices are sticky and there is non-positive "growth" of the real GDP. In other words, we experience stagflation. If I understand correctly, non-...
2
votes
2answers
28 views

Definition of covered market

I do Industrial Organization course, and I've seen the phrase "market is covered" several times in my lecture slides, however, I'm struggling to find the formal definition of "covered market" and the ...
2
votes
0answers
12 views

Capital Recovery Factor for Hyperbolic Discounting

I'm looking for a closed-form capital recovery factor when hyperbolic discounting is used. The Wikipedia article on hyperbolic discounting has this formula for the "present value of a series of equal ...
0
votes
0answers
27 views

On shapes of indifference curves

I encountered this question in Microeconomics by Pindyck and Rubinfeld. The question says that "Suppose Jones and Smith have each decided to allocate $1000 per year to an entertainment budget in the ...
0
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2answers
34 views

Are there internationally published sources of trade sanctions?

How to implement embargoes with respect to a trading company? Let's assume i am a small trading agent which assists and guides small exporters and importers while keeping embargoes and light ...
0
votes
1answer
28 views

Equations of “rational mechanics” and general equilibrium

Vilfredo Pareto, referring to the equations that determine equilibrium, wrote: These equations do not seem new to me, they are old friends. They are the equations of rational mechanics. This ...
1
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0answers
21 views

Is there evidence that non-profits might have a tax or other competitive advantage in competing with for-profit corporations?

Lets say my non-profit's interest is to diminish co2 emissions in the city. Are there useful forms of putting that tax money for better use and gaining competitive advantage against other for-profit ...
0
votes
2answers
25 views

Are there any economic theories around the concept of companies focusing on that which is easier to calcuate?

A lot of the organisations I have worked for have focused on that which is easy to calculate. For example, direct cost savings are often easy to calculate, but analysing the wider implications of a ...
0
votes
2answers
183 views

Balanced budget and change in taxes

Consider a simple Keynesian economy in which the government expenditure ($G$) exactly equals its total tax revenue: $G = tY$ where $t$ is the tax rate and $Y$ is the national income. Suppose that the ...
-3
votes
0answers
20 views

Calculate the national income aggregates [closed]

In a single day Rehan, a barber,collects Rs 500 from haircuts ,over this day,his equipment depreciates in value by Rs.50. Of the remaining Rs 450,he pays sales tax worth Rs 30,takes home Rs 200 and ...

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