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0answers
16 views

Are heterogenous expectations models still determinate, closed models?

Cars Hommes proposed many models based on agents having heterogeneous expectations. Agents switch between a fixed set of prediction rules depending on their forecast error history. However, it seems ...
0
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0answers
35 views

Are economists expecting any significant, negative side effects of the coronavirus stimulus?

New Question The US government spent nearly $3 trillion in the last few months. Are economists expecting any significant, negative side effects? If so, what are the most significant developments ...
1
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1answer
35 views

Is there any up-to-date list of hours of work needed to buy a Big Mac?

Is there any up-to-date list of hours of work needed to buy a Big Mac? I have found only up to 2018.
5
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2answers
120 views

Does consumer surplus over-weigh the interests of high-income consumers?

An individual's willingness to pay for a good not only depends on how much they value that good, but also on their income level (at least under the conventional non-economics definition of the word '...
2
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3answers
308 views

Why is the tat-for-tat strategy a Nash equilibrium in infinitely repeated games?

Why is the tat-for-tat strategy a Nash equilibrium in infinitely repeated games, but not a Nash equilibrium in a finite scenario? Specifically for this matrix: Assume higher payoffs reflect higher ...
0
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1answer
31 views

How to determine covariant stationary values?

I am trying to determine the values for when this ARMA model is covariance stationary. I have the model: $z_t = a + Bz_{t-1} + u_t + u_{t-1}$ I have written it in terms of the lag operator: (1 - BL)...
2
votes
1answer
18 views

Who holds the Reverse Repo and Repo respectively in a Repurchase Agreement?

According to investopedia.com in this definition A reverse repurchase agreement, or "reverse repo", is the purchase of securities with the agreement to sell ...
0
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1answer
51 views

Money multiplier [closed]

I found this question in my macro's notes and I don't know what to answer. If you could please help me, I would appreciate it. Thanks Suppose someone deposits 1,000 u.m. in your bank and that the ...
6
votes
1answer
511 views

First paper to introduce the “principal-agent problem”

The principal-agent problem is to some extent an intuitive thing that even ancient kings must have thought about. But what is the first journal paper that has introduced the term "principal" and "...
1
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2answers
74 views

Why does the Market Risk Premium increase in times of crisis?

My question is a bit more specific as it is indeed well known that investors expect higher returns in times of higher risks/volatility. However, isn't it counterintuitive to expect the market to ...
1
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1answer
78 views

What is the difference between conditional and unconditional risk premia?

This is an asset pricing question. What is the difference between conditional and unconditional risk premia? Here's the context: The fact that carry trade strategies typically earn positive average ...
3
votes
1answer
75 views

Why is the graph of unitary elastic demand a hyperbola?

My teacher said that the graph of unitary elastic demand is a parabola: But i fail to understand how in a hyperbola the percentage change of price and quantity demanded remains same. Can someone ...
0
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1answer
42 views

Reduction Rules for Auction conflicting Deals

This question addresses an interdisciplinary science between Computer Science and Economics (Modern Auction Design). I'm posting my question here to get ur expert opinion as economists on the ...
13
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9answers
5k views

What Level of Government Debt to GDP Ratio is Sustainable?

I was reading that Japan has a debt to gdp ratio of 240pc and I cannot understand why this has not left the country "bankrupt"? From looking at this like an ordinary person this level would be ...
2
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2answers
43 views

What are the effects of liquidity crisis?

What are the actual effects of the lack of liquidity? Economists always say, we need to increase liquidity at a time of recession, but why is liquidity is important for us? Could anyone explain it in ...
4
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2answers
785 views

How to perform unbalanced panel data regression in R?

I am attempting to perform an unbalanced panel data regression in R. My code is as follows: ...
1
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0answers
33 views

In a rational expectation framework, do all agents know the true law of motion of the economy?

Expectations are model consistent, on average, in a RE framework, so errors are made, but on average they are zero. thus In a rational expectation framework, do all agents know the true law of ...
1
vote
1answer
18 views

Acessible sources for Hierarchical Bayes?

I am trying to learn how to build hierarchical bayesian model, I can find some papers online on the topic but I am looking for some textbook or some treatment that is more student friendly than ...
0
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0answers
23 views

Calculation of theoretical futures value

we form a stock index by using only two stocks in the index. One of the stocks is the Stock-A. The current selling price of the stock-A is 103 dollars and the second stock is the stock-B. The current ...
0
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1answer
25 views

Are FedWire transfers and volume tracking exchanges of reserves between banks that have accounts at the Federal Reserve?

Looking at Fedwire® Funds Service - Monthly Statistics it appears that these transactions are between banks but I'm trying to confirm is whether the stuff they are exchanging is classified as reserves....
1
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1answer
36 views

Why did coronavirus cause a food shortage?

The argument I have seen is that since restaurants closed, demand for food is down. I understand how demand being suddenly lower could disrupt supply. What I don't understand is why demand is down. ...
1
vote
1answer
31 views

What would be the “text-book” result of governement taking on massive debt immediately before a significant recession [closed]

Supposing, (entirely hypothetically, of course ;) ), that the UK government had taken on massive future debts (by spontaneously giving 2-3% of GDP to its citizens, in GBP, say.) immediately before a ...
1
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2answers
73 views

What is the tipping point for hyper-inflation?

The recent injection of $2 Trillion into the US economy has prompted me to wonder: At what point does introducing money to a system cause hyper-inflation? (such as Venezuela or other hyper-inflation ...
2
votes
1answer
89 views

Best-responding to a stochastically higher distribution of bids

In Auction Theory, Krishna writes that: a bidder who faces a stochastically higher distribution of bids–in the sense of reverse hazard rate dominance–will bid higher (This follows the proof of ...
1
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0answers
20 views

Nested Multinomial Logit Estimation

I am trying to estimate a nested multinomial logit model for transportation mode in R. I am using the following model. ...
1
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0answers
11 views

Does the law of motion remain constant in a rational expectation model? Does it constantly change in a boundedly rational agent framework?

Is the following true? The rational expectations hypothesis also implicitly assumes that the law of motion of the economy does not change, which actually is a self-fulfilling assumption as long as ...
2
votes
4answers
91 views

How to achieve the best outcome by a single statement in this game?

This game is taken from Schelling's Game Theory: How to Make Decisions by R.V. Dodge, in which contenders practice brinksmanship to their own advantages. It goes as follows: Anderson, Barnes, and ...
0
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1answer
72 views

How does interest rate impact exchange rate?

When I’m using the forward exchange rate formula based on non-arbitrage theory, it tells me that a positive interest rate spread (i_domestic > i_foreign)would cause the forward exchange rate(units of ...
1
vote
0answers
19 views

Is there a standard term for this tradeoff when subsidizing: inducing dependence vs providing support?

I've often heard it informally argued "people will become lazy if you give them handouts". Although I doubt the economic sophistication of most such assertions, I do think they have a real point: you ...
10
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2answers
12k views

CES: Production function: Elasticity of substitution $\sigma = 1/(1 + \rho)$

I have to prove that $\sigma = 1/(1 + \rho)$ for the CES production function: \begin{align} q = (l^\rho + k^\rho)^\frac{1}{\rho} \end{align} I found out that I need to solve the following equation: \...
0
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0answers
20 views

Determining the price level when velocity is unknown, can k = v?

According to the quantity equation mv = py if m = 2000, y = 400 and then if m doubles while velocity remains constant (%change in p = %change in m) would the change in P be from 2,5 to 5 or 5 to 10? I'...
2
votes
1answer
36 views

Should I include country dummies when I combine datasets of 3 countries?

I am currently doing the analysis using firm-level data of three countries combining together. Also, it is a cross-sectional analysis. Therefore, in the regression, I control for industry dummies to ...
2
votes
1answer
21 views

why is market clearing price assumed in cournot model with homogenous products

In the cornout model two firms choose the amount of a product they wish to produce. It is assumed that the price that results is the market clearing price for the total supply. Is there a ...
1
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0answers
17 views

How do you perform economic analysis of a country? [closed]

I have no academic background in economics except for one class I took in engineering school. In this recent crisis of coronavirus, I would like to know how my country is doing overall and how deep in ...
2
votes
1answer
108 views

Why are indifference curves (often) of infinite length?

Indifference curves are often of infinite length. Is this implied by monotonicity or non-satiation? If not, what is/are some condition(s) that are sufficient for indifference curves to have infinite ...
3
votes
3answers
66 views

Proving a result In Jones (1999) “Growth: With or Without Scale Effects”

Jones (1999) builds his semi-endogenous growth model where output is produced with only one input, labour, in the following "research" function: $$ Y = A^\alpha L_Y $$ Labour is augmented with ...
1
vote
1answer
26 views

Estimating a difference-in-differences with multiple time periods: why do margins results change when you simply change the base period?

My understanding of margins results is that they should not be sensitive to the base period chosen for a categorical time variable. However, I find that they are. ...
1
vote
1answer
32 views

How does the GDP multiplier work?

When we learn about the GDP multiplier, it is portrayed as 1/MPS, because savings are supposedly a leak out of consumer spending. However, what I don't understand is aren't those savings spent anyways ...
1
vote
1answer
69 views

Basic question on S=I

Consider the identity: $$ Y=C+I+G+X-M $$ where $Y$ is defined either as value-added output, or income, or total expenditure. Now, consider private individuals, who decide to save money, as opposed to ...
2
votes
0answers
27 views

Does the federal reserve create any type of deadweight/welfare loss?

In microeconomics, we learn that when a good is overproduced or under produced, there is a dead weight loss associated with it. It seems like the same concept would apply to macroeconomics, where the ...
0
votes
1answer
33 views

Why does a model that is used for policy analysis needs its shocks and parameters to be structural (= invariant) to the shock under consideration?

In their paper, " New Keynesian Models: Not Yet Useful for Policy Analysis" V. V. Chari, Patrick J. Kehoe, and Ellen R. McGrattan argue that one needs a structural model in order to analyse the ...
3
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1answer
83 views

Marshalian and Hickisian Demands and Slutsky Equation

everyone. I have the following question: A consumer has the following indirect utility function: $ V(p_1,p_2,b) = (p_2k-b)p_1^{-1} \left[ \frac{2p_2k - 2b}{p_2} \right]^{-2}, x_2 < k$ a) Find ...
0
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0answers
22 views

What would we say on the utility of risk and its consequences?

Anything has its risks and anything has its utility or desutility. The risk aversion causes a looking for safer alternatives in the market which maximizes utility in a trading off between risk and ...
1
vote
1answer
89 views

Log of dummies variables

I am having a bunch of dummies variables and some of them when trying to get the scatter plots they are collapsed on the horizontal line. It is hard to see any relation. I know from theory they should ...
0
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0answers
14 views

Controls for a GDP per capita model

I'm constructing a model to test the relationship of some different factors on GDP per capita in a single year using simple OLS regression. Most studies I've found on economic growth simply use the ...
2
votes
2answers
39 views

Why should the cost of home ownership and home renting be equal in the long run?

According to the person in this video (at about 10:10) from the economist, the evidence shows that long run cost of owning and renting homes are approximately same. The video itself tries to explain ...
1
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0answers
7 views

Do Fines Imposed by Regulators Improve Performance?

After receiving a fine, do companies immediately seek to recoup their loses or do they take it on the chin? I'm just wondering if it's the most efficient way of deterring complacency or non ...
3
votes
1answer
23 views

In a binary-dependent variable model (logic) will the inclusion of a scale introduce endogeneity?

This question is somewhat related to my previous question, see here: https://stats.stackexchange.com/questions/463221/why-when-do-attitudinal-scales-introduce-endogeneity I wonder why a scale as an ...
1
vote
1answer
44 views

Is the satisficing choice function rationalizable if the ordering isn't observable?

Edited: Say an observer observes only the choices made by the decision maker (and the sets from which these choices are made), but does not know the ordering. Then would the decision maker's choices ...
0
votes
2answers
1k views

Perfect complement graph and isoquant

$f(x_1,x_2) = min \{x_1,x_2\} + x_2$ if that was the production, what would the isoquant be? Would it simply follow $x_1 = x_2$? I'm not entirely sure what it the graph would look like.

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