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Proving the Global stability in the Solow Swan Model

Consider a simplified version of the Solow-Swan model in discrete time, where technology is normalized to one and the population size is constant. The Solow equation is given by \begin{equation} ...
Maximilian's user avatar
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1 answer
31 views

Is cross-price elasticity a Cobb-Douglas production function?

This may seem like a silly question... Well... I guess, because it really is... But I have just realized that the intuition behind both principles may not be mutually exclusive. Consider we would like ...
Athaeneus's user avatar
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27 views

What is the frisch elasticity and its meaning?

I understand that Frisch elasticity is the "elasticity of hours worked to the wage rate". I wonder why then we use this specific naming only for this? Is this to make it clear what this ...
student1's user avatar
1 vote
1 answer
34 views

Calculating annual inflation rates confusion

Im surprised as to why im finding this question so complicated , I'm assuming its due to the miscommunication and misuse of the term in inflation without explaining the context they are using it in . ...
j jose's user avatar
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0 answers
21 views

Proof that utility function is differentiable

after a little problem (I asked my question in the answer section, apologize, all my bad for this), I repost my question here with the same message : "I'm new on economics stackexchange, and I've ...
Economos's user avatar
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1 answer
10 views

How to get the function that shows the relationship between wage and labor supplied

In the purchase-leisure trade-off curve, we get the relationship between wage and working hours. But how can we get the relationship between wage and quantity of labor supplied? The demand curve is ...
Luming's user avatar
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1 vote
2 answers
20 views

Can investments fund welfare?

People are encouraged to invest in order to provide passive income for their retirement. Meanwhile, lots of the population is on welfare, which, I understand, comes out of taxes. Investing isn't ...
Scott McNay's user avatar
0 votes
2 answers
61 views

Should younger people earn more then older ones?

I think in all societies it is usually the case that when you start a job you are usually paid less than a person in the same position who is about to retire. I'm not an economist by any means, but I ...
stish's user avatar
  • 1
0 votes
1 answer
32 views

In a two-good world, if one good is a Giffen good then the other is a good luxury

In a two-good world, if one good is a Giffen good then the other is a good luxury. This is a false statement. Reason: If X is a Giffen good then Y must be a normal good. But we cannot get any ...
Jonathen's user avatar
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1 answer
36 views

True or False: If there is no money illusion, once all price elasticity is known, the income elasticity of commodity demand can be calculated

True, false or uncertain: If there is no money illusion, once all price elasticity is known, the income elasticity of commodity demand can be calculated. My answer is false. I don't think it's ...
Jonathen's user avatar
  • 109
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1 answer
72 views

Which of these two lotteries, a consumer with Von-Neumann Morgenstern preferences will choose under exponential distribution?

Consider two lotteries each having an exponential distribution. The function of cumulative distribution of an exponential distribution is: $$F(x;\lambda)=1-e^{-\lambda x} \forall x \in \mathbb R_{+}....
Jonathen's user avatar
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1 answer
29 views

How to show that it is possible to approximate this risk premium?

Suppose a consumer with Von-Neumann Morgenstern preferences is faced with two risks and can only eliminate one. Let $\tilde{\omega}= \omega_1$ with probability p and $\tilde{\omega}= \omega_2$ with ...
Jonathen's user avatar
  • 109
1 vote
1 answer
12 views

Why are sticky wages an explanation for an upward sloping SRAS curve?

I often see that the theory of sticky wages is cited as an explanation for an upward sloping short run aggregate supply curve. I understand that if aggregate demand shifts to the left, there will be ...
toomanyfeet's user avatar
0 votes
1 answer
31 views

Present Value of Profits Earned From the Discovery of New Ideas in the Romer Model

Page 127-128 of Romer's Advanced Macroeconomics states that Equation (3.39) tells us that the profits at t are $\left[\frac{(1-\phi)}{\phi}\right]\left[\frac{(\bar{L}-L_{A})w(t)}{A(t)}\right]$. These ...
Tan2525's user avatar
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0 answers
8 views

quasi-linear utility function [closed]

Quasi-linear utility function of the form 𝑈(𝑀,𝐵)=sqrt(M)+𝐵. Derive the demand function for 𝑀 as a function of the prices, 𝑃𝑚 and 𝑃𝑏. Verify that the demand for 𝑀 is independent of the income ...
Ochie's user avatar
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1 vote
0 answers
26 views

How accurate are Angus Maddisons historical GDP estimates?

Angus Maddison estimates seem to be very often used by economic historians however they seem to be very speculatory. This source states that they were unsure when the UK was surpassed in real GDP per ...
john's user avatar
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1 vote
1 answer
73 views

Proving an additive function is sigma additive (Measure Theory)

I'm here to kindly ask u a check about the proof of the following statement: Let $\mathcal{A}$ be an algebra and $\mu : A \rightarrow [0,\infty]$ and additive function. Then $\mu$ is $\sigma$ ...
Calogero Sortino's user avatar
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0 answers
10 views

Increase in income in an economy would increase

Increase in income in an economy would increase the following except Consumption Savings Imports Exports
Janu's user avatar
  • 1
0 votes
0 answers
28 views

How to Find the Relationship Between Variables in Time-Series Data?

I would like to find the relationship between two variables (spending and earning) in time-series data and I am wondering if VAR would be a good way to approach this? If not, which approach(es) would ...
twisted_SOLDIER's user avatar
0 votes
1 answer
23 views

Interpretation of OLS regression coefficient of -1.19 when depent variable ranges from 0-100

In an experiment, the participants were asked to allocate 100% of their budget to three categories in different scenarios. Now, I am analyzing the allocation to one particular category via OLS ...
hunter_gatherer's user avatar
0 votes
1 answer
27 views

How do Fiscal and Monetary policy interact intuitively?

Suppose there is a recession, and the government aims to provide a fiscal stimulus. Assuming an independent CB, the government will issue treasury bills to borrow and finance the stimulus. Consider ...
user52932's user avatar
  • 103
1 vote
1 answer
23 views

Arrow’s Impossibility Theorem Proof - Unicity of "dictator"

I have a hard time understanding completely Arrow’s Impossibility Theorem proof, even the very pedagogical one by Geanakoplos, that can be found for instance here : https://users.ssc.wisc.edu/~dquint/...
Kinta's user avatar
  • 11
0 votes
0 answers
14 views

Question on productivity cycles

What is “productivity cycles”? Is this different from business cycles? And suggest papers on the productivity cycles as both theoretical and empirical studies? I will be happy if you inform me ...
studentp's user avatar
  • 120
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1 answer
36 views

Confusion regarding the Slutsky equation

I'm reading Henderson and Quandt's Microeconomic Theory textbook and in the derivation process of the slutsky equation the final formula confused me a bit. The first term on the right of the equation ...
Adnan's user avatar
  • 1
1 vote
1 answer
19 views

Cobb-Douglas utility function. Deriving the price index with N discrete goods functions

how do you get the final form of the price index for a cobb-douglas with n discrete goods? I can't get to the solution where e(p,1) = logP = the sum of (shares * log(P))
gow's user avatar
  • 11
1 vote
0 answers
53 views

How do I solve for the Nash equilibria in the Hotelling price competition model

I'm trying to find the Nash equilibria in the following problem: Two firms produce an identical product with no fixed costs. The marginal cost of each firm $i=1,2$ is $c_i\in (0,1)$. Customers are ...
Ludwig Gershwin's user avatar
0 votes
1 answer
36 views

Economies of Scale, texbook example

I am currently studying international economics and I'm going over economies of scale, I get the concept, but there is an example in my textbook that I don't understand. Here is a screenshot for ...
KEll's user avatar
  • 1
1 vote
1 answer
52 views

Finding the optimal trading strategy

Suppose there is one asset that you can buy and sell, and that you know what was the selling price and buying price at all times between times t0 and t1, both in the past. If you would have had an ...
user171780's user avatar
1 vote
1 answer
52 views

How to force two utility functions representing the same preference to generate expected utility functions representing the same order on lotteries?

Let $i$ be an agent, and let $A=\{x,y,z\}$ be a set of three alternatives. Then, suppose that player $i$’s linear order (i.e., complete, transitive, antisymmetric and reflexive binary relation) on $A$,...
EoDmnFOr3q's user avatar
0 votes
0 answers
22 views

Equilibrium with step function demand and supply

How do I solve a system of equations for equilibrium where the demand and supply functions are both step functions?
jimbo's user avatar
  • 11
0 votes
0 answers
12 views

Market for capital goods of housing: Name of the model

I am searching for a model of the market for capital goods applied on purchase prices, rents, and supply of new housing. The model, operating in continuous time, considers prices as a function of ...
Athaeneus's user avatar
  • 798
1 vote
1 answer
115 views

Intuition of two Measure theory statements

I'm struggling in getting the intuition of two statements about measure theory: Given a measure space $(X,F,\mu)$, $f \in M^+ $, where $M^+ = M^+(F) $ is the set of non negative F-measurable functions ...
Calogero Sortino's user avatar
0 votes
0 answers
25 views

Does anybody have any multiple choice questions for any of these topics

I have an exam next week and just trying to find some MCQ to do but cannot find any. These are the topics: Week 1 The Consumption-based CAPM Week 2 Risk-Sharing, Portfolio Choice, SDF generalised, ...
john's user avatar
  • 1
0 votes
0 answers
38 views

By how much does debt exceed credit in major currencies?

Fiat currency is created by issuing loans. Assume 100 crowns (a non-specific currency) existed before the crown became a fiat currency. Every time a new 100 crown loan is made, 100 crowns of credit ...
fadedbee's user avatar
  • 101
0 votes
0 answers
16 views

RDD regression discontinuity

I have a tiny dataset for several countries: Year (2010-2022) , GDP per capita, Subsidy amount - in the second column (fossilf), and a few other variables. The subsidy amount is 0 for several years. ...
Jey's user avatar
  • 1
1 vote
0 answers
6 views

FMA European conference vs. EFMA annual conference

There are two large financial economics conferences in Southern Europe this June: FMA European conference (June 12-14 in Turin) EFMA annual conference (June 26-29 in Lisbon) I would like to go to ...
Richard Hardy's user avatar
0 votes
1 answer
15 views

Methods of calculating 12 month Inflation rates

I was trying to understand inflation calculations when i came across this Scenario, they are trying to calculating the 12 month inflation rate , but the weighted figures given(essentially percentage ...
user42141's user avatar
0 votes
1 answer
39 views

Proof of existence and uniqueness

Please help me out with the conditions for existence of a pure strategy Nash equilibrium. The game is one of two players with symmetric strategies. After that, please help me out with the conditions ...
user46371's user avatar
0 votes
1 answer
21 views

Labor in a monopsony

I understand that workers in a competitive labor market will take the market rate as given. Firms can hire as many workers as they want at the market rate. Why doesn't this apply to monopsonies? If ...
asdf's user avatar
  • 13
4 votes
1 answer
73 views

Prove: The law of demand holds if WA, Walras' law, homogeneity of degree 0, and homogeneity of degree 1 in wealth hold for Walrasian demand functions

Problem I am asked to prove the following result (MWG Exercise 2.F.5): The law of demand always holds if the walrasian demand function $x(\mathbf{p},w)$ satisfies the weak axiom of revealed ...
Beerus's user avatar
  • 325
0 votes
0 answers
9 views

partial equilibrium firm investment model with collateral constraints

I am trying to solve the partial equilibrium firm investment model with collateral constraint. My state variables are firm productivity, capital and debt. While I know how to iterate the value ...
Ганна's user avatar
2 votes
0 answers
86 views

Simple backward induction problem

I am trying to derive equations in Leeper(1991). The utility function is $\log(c_t)+\log⁡(m_t)$ and the budget constaint is $c_t +m_t +b_t +\tau_t =y+\frac{m_{t-1}}{\pi_t }+R_{t-1}\frac{b_{t-1}}{\pi_t}...
guest's user avatar
  • 310
0 votes
0 answers
22 views

Varian Analysis Non satiation question

Consider preferences defined over the nonnegative orthant by (xl,x2)> (yl,y2) if X1 + X2 < y1+ y2. Do these preferences exhibit local nonsatiation? If these are the only two consumption goods ...
Chavi Dusad's user avatar
0 votes
0 answers
25 views

What should I do before an OLS regression and Johansen cointegration test with time series data?

I have to make a regression with real exports as the dependent and then an aggregated GDP income variable and the real effective exchange rate as independent variables. My variables are time series (...
ORESTIS TZIAMALIS's user avatar
2 votes
1 answer
85 views

CES function: Lagrangian or Kuhn-Tucker

Let's have the following problem: $$U(\boldsymbol{x}) = \left(x_1^\rho + x_2^\rho \right)^{\frac{1}{\rho}} \qquad s.t. \qquad P_1 x_1 + P_2 x_2 \leq M$$ Is it optimal to solve this problem via pure ...
Athaeneus's user avatar
  • 798
0 votes
1 answer
34 views

Questions about demand curve as marginal benefit curve

I understand that the demand curve can be viewed as a marginal benefit curve in that, for a given quantity, the price needed for that quantity to be demanded will be equal to the marginal benefit of ...
firstnamelastname45341's user avatar
2 votes
1 answer
50 views

Proof for Marshallian Demand function

If you have a Marshallian demand function that is strictly convex, then it satisfies WARP. How to prove this?
babededeeptido's user avatar
1 vote
0 answers
42 views

Applying linearization formula to Leeper(1991) model

I am trying to derive equation (3.1) and (3.2) from Leeper(1991). (3.1) $E_t \tilde{π}_{t+1} = αβ\tilde{\pi}_t + βθ_t$ (3.2) $φ_1 \tilde{π}_t + \tilde{b}_t + φ_2 \tilde{π}_{t−1} - (β^{−1} − γ)\tilde{b}...
guest's user avatar
  • 310
2 votes
1 answer
74 views

Can GDP ever be negative?

Imagine that in an economy we only produced a toy and that cost us 10 dollars. We don’t sell this toy in year 1. Then this goes under Investment as +10 and GDP is +10. But say the only thing we do in ...
Darby Bond's user avatar
1 vote
0 answers
23 views

Help solve a problem about the leisure demand/labor supply mode. Halfway solved but fear my solution can't be right?

I've attached the question along with my current (incomplete) solution, but am unsure if my solution to part b makes sense given the question in part c. No substitution effect if demand for leisure is ...
Lily Rademacher's user avatar

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