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1answer
83 views

Effect of money supply on price level

Consider a macroeconomy defined by following equations: $$M = kPy + L(r)$$ $$S(r) = I(r)$$ $$y = m $$ Where $M$ is money supply, $P$ is price level, $y$ is output, $r$ is interest rate, while $k,m$ ...
2
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1answer
39 views

Net Neutrality and Recent Telecom Projects

It has come to my attention that the big telecom providers are launching some big infrastructural projects recently (at the time of post, Jan. 2018). I presume by that they mean talking laying cables ...
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1answer
23 views

Real Income and a Fixed Money Supply

What would happen to nominal income and wages if the money supply were fixed (100% reserve banking). Would real wages increase, even though nominal wages would stay the same or even decrease?
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0answers
3 views

Understanding lognormal distribution of stock prices

I am trying to understand how to correctly use the lognormal distribution. Let's say I have a list of Adjusted Price of a stock, I know that its daily returns is ...
0
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1answer
13 views

Why does the inverted yield curve occur with US Treasury securities?

I have also thought that US securities were considered nearly risk free as the government will almost always pay them back. So why is it the case that investors view short term securities as more ...
1
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2answers
25 views

Private Investment Impact on Bond Yields

From Japan to the US to Germany, we are currently seeing longer term bond yields falling at an alarming rate. I tune into a fair bit of economic commentary, and can often come to some sort of ...
0
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1answer
9 views

Currency Devaluation - As a Means of Paying Off Debt

From https://www.sapling.com/8117368/debt-handled-currency-devaluation: Currency devaluation will not only affect consumer debts, but it will affect how a country pays back its national debt. If a ...
1
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1answer
24 views

US unemployment data release date

Using the CSV file provided by St. Louis Fed (which is based on the data series LNS14000000 from the Bureau of Labor Statistics) I noticed that the date is always the first day of each month for the ...
1
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0answers
6 views

Where does the current debate stand on passive vs active monetary policy?

The debate between active and passive monetary policy is mentioned in most macroeconomics textbooks. Where does the current debate stand? Has a consensus been reached among economists? Do economists ...
1
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1answer
37 views

Abraham (1987) Simple Job Market Matching Model

I have a question about a derivation in Abraham (1987)'s simple job market matching model (equations 3 through 7): She begins by writing down tautologies: J - V = L - U = E where J is the number of ...
5
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1answer
1k views

Estimating the rental rate of capital from data

Take the classic optimization problem of the neo-classical firm: \begin{equation} \begin{array}{*2{>{\displaystyle}r}} \mbox{maximize (over $K, L$)} & f(K, L) - RK - WL \end{array} \end{...
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2answers
125 views

Pareto set with Cobb-Douglas and Leontief preferences

If $U_A(x_A,y_A)=x_Ay_A$ and $U_B(x_B,y_B)=min(x_B,y_B)$ and the total endowments are (8,4), is the Pareto set given by the line joining the kinks of B (black line shown in the diagram)? Shouldn't the ...
2
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1answer
23 views

Opportunity Cost effect on benefits

My question is the following: Let's say a person has two career choices. He would be succesful in both, but in one of them he is slightly better and thus he will do better. So let's say career A will ...
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2answers
29 views

Consumer's side and producer's side

GDP gives the picture from the consumers’ side, while GVA gives the picture from the producers’ side. By definitions of both GDP and GVA "the amount of goods and services PRODUCED in an economy in a ...
6
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1answer
240 views

Labour markets and supply-side policies: too much stress put on the WS push factors?

In reading several macro textbooks, it seems that most of the supply-side policies tend to be focused on the labour supply side (wage setting curve), instead on the firm/labour demand side(price ...
2
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1answer
109 views

Wages, capital: Substitution and Output Effects

Consider a CES production function $Y=f(K,L)$ with elasticity of factor substitution $\sigma>0$. The substitution effect of higher real wages naturally implies a shift along the isoquant to more $...
1
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2answers
45 views

When the Central Bank sells a bond, where does the money go ultimately?

As the accepted answer points out, the premise of my question was flawed. Thank you for the dispelling of my wrong assumptions. The original question follows. There are two related questions (and ...
3
votes
1answer
251 views

Perfect Bayesian Equilibria

What are the perfect Bayesian equilibria in the following game? The part that is confusing me is the right-hand side, where player 2 is of type N. Thanks! EDIT: My workings out so far are given ...
-1
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0answers
11 views

If China stopped exporting in USD, what would happen to the economy?

If China stopped exporting in USD, what would happen to the economy? What would be the effects in US economy, China economy and Latin America economy?
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0answers
3 views

what are the advantages of using Canonical Cointegrating regressions?

What are the advantages of using Canonical Cointegrating Regressions in comparison with OLS regressions? Thanks.
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0answers
20 views

Determination of Value of gold by share markets of India

How value of gold is determined by the share markets of India? Are the following factors responsible? ...
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0answers
7 views

Savings as far as an individual is concerned

If I have a savings of 1 million usd at an age of 46. Is it enough if the returns are at 6.5-7% on a conservative side. I have 2-3 houses in my home country and have bought a flat abroad . I have a ...
0
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1answer
18 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
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0answers
9 views

Can the New Development Bank by BRICS countries compete with World Bank or IMF?

The BRICS countries have created the New Development Bank with an initial pool of $100 billion. What factors will determine if the NDB can ever compete with World Bank, ADB or the IMF?
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0answers
4 views

In search for a simple mental bayesian model

I have read many articles about Bayesian thinking. Most of the time, they fall under 2 categories (or a mix of both). The first category of articles focuses on Bayes’ formula. The second category of ...
1
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1answer
28 views

How is employment related to aggregate demand and aggregate supply?

When we talk about excess or deficient aggregate demand , how does employment suddenly comes ?
1
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1answer
25 views

About gross domestic product at factor cost

GDP at factor cost= Net value added + Depreciation. Here my question is why depreciation added to Net value added? I am confused here: Net value added = Gross value added - depreciation; so the above ...
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0answers
72 views

Kyle Models - Information Asymmetry - Certainty Equivalent

I have some significant questions that I am dealing with, but I only want the intuition behind of them. I would be grateful if someone could help me. Where should I find some precise definition of ...
1
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1answer
12 views

Interpretation of the World Bank's definition of Portfolio equity inflows

The following is the definition from World Bank: Does it imply that apart from FDI, portfolio equity includes net inflows from equity securities including shares, stocks, depository receipts and ...
0
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2answers
48 views

What does poorest country by population mean?

I understand poorest countries based on GDP but what does poorest countries by population mean? Below is the link to the information I was looking at. http://worldpopulationreview.com/countries/...
1
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1answer
57 views

How do I derive Hessian of this function and check for concavity?

The function is $f(K,L)= AK^{a}L^{b}$ on the set of points $(K,L)$ with $K\geq 0$ and $L\geq 0$, assuming $A>0$ How do I find the Hessian and check for concavity?
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1answer
16 views

The effect of financing of government debt on the yield curve

Is it reasonable to expect that the US govt's financing of the growing budget deficit and US debt by issuing long term treasury bonds will push long term interest rates higher in the future? Shouldn'...
2
votes
2answers
31 views

Solving a problem using CAPM and capital structure theory

I am given the following problem: A firm currently owns assets worth $4$ milllion dollars that have a beta of 1. The risk-free interest rate is 10% and the market risk premium is 8%. Suppose the firm ...
0
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0answers
15 views

what is the difference between normal OLS simple linear regression and Canonical cointegrating regression?

what is the main difference between simple linear regression and Canonical cointegrating regression. Why we should use Canonical cointegrating regression instead of OLS?
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0answers
26 views

Why is income tax so high? (UK)

Granted, I expect this question could be easily answered, but I cannot find a definitive reason as to why income tax is pinned at such a high rate in the United Kingdom. I'm not much of an economist, ...
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0answers
10 views

Hiw to calculate the equilibrium of national income and the investment muiltiplier

Given the following structural equations of a hypothetical economy Y = c + I + g + x -m C = 140 + 0.15 Y-t T =100 I = 50 + 0.15y G = 120m X = 130m M = 125m Determine 1. Equilibrium national income ...
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0answers
16 views

regression method for data that contain a number of observation for several years

i have a data set about 125 companies for each company i have the salary and some other variables about the top 5 managers in each company the observations is the top 5 managers in each one of the ...
0
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0answers
31 views

Why is the cash in circulation on the rise in rich countries?

The amount of cash in circulation is on the rise in rich countries (US, EU, etc; except the cashless economy, Sweden). In the digital era, isn't this phenomenon contradictional? For example, here's ...
0
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1answer
74 views

What is an unconditional model for a time series variable?

If I am being asked to do an unconditional analysis of a time series variable, lets say GDP starting in 2000, what model am I supposed to estimate?
0
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1answer
24 views

Price of Anarchy when the cost is to society and not to the selfish agents

Let's say there is some scarce resource and several agents compete to access this resource. Each agent is able to convert the resources into products that are beneficial to society, but each agent has ...
2
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0answers
30 views

Fixes of quadratic utility when probability of decreasing utility is large

In finance and specifically portfolio theory, a popular utility function is quadratic utility $$ u(x)=x-\frac{\lambda}{2}(x-\mu_x)^2 $$ where $x$ is wealth and $\lambda$ is the parameter of risk ...
-1
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1answer
13 views

What is recession? Two quarters of -ve GDP or two quarters of slowing GDP?

I'm confused with the definition of recession. Is it two quarters of negative GDP growth , meaning GDP growing at -1% and -2% or GDP slowing to 2% and 1.5%.
1
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2answers
667 views

Compound interest problem using PMT in Excel

So I found this example in the net Compound interest formula (including principal): A = P(1+r/n)(nt) If an amount of $5,000 is deposited into a savings account at an annual interest rate ...
2
votes
1answer
39 views

Solow Model with a Capital Stock Externality

Suppose we have the following form of the Solow Model: $$ Y_t=K_t^{a+b} L_t^{1-a} $$ where a,b >0, and a+b<1. Is it possible to determine the steady state growth rate of k (k=K/L), and the steady ...
2
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2answers
55 views

Specification bias - estimated variance is biased estimator of true variance of error term

Consider the two models $ (a) y = X\beta + u $ where $X$ is $n \times K$ and (b) $y = Z\gamma + \omega $ where $Z$ is $n \times r$. Under classical assumptions (and $Z$ and $X$ are non-stochastic) if ...
1
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0answers
16 views

Is a high borrowing rate bad?

I'm not an economist, so this may be a stupid question, but why are high borrowing rates among individuals and corporations bad? Like, I've heard high student and credit card debt mentioned as reasons ...
0
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0answers
25 views

Forecasting Volatility through GARCH and EGARCH models

I am at a final stage of my dissertation but I am a bit confused. I am trying to forecast volatility by using returns through GARCH(1,1) and EGARCH(1,1) models. I use daily prices of indexes to ...
1
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1answer
104 views

Panel Data and Forecasting

I have balanced panel data for around 130 countries, over three years. I ran a fixed effects regression using 'country' as my panel variable, and adding dummies for 'year'. I want to forecast the ...
1
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0answers
14 views

Yield curve inversion and recession

Yield curve inversion is often a sign of a looming recession, but is there an explanation of this phenomenon other than the fact that historically we have seen that the two phenomena were indeed ...

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