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1
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2answers
40 views

external benefit confusion

I'm a little confused by the following question and answer provided by MRU: Fruit farmers pay beekeepers for their honeybees’ pollination services. Honeybees provide an external benefit to fruit ...
0
votes
1answer
36 views

Interpretation of sub-unity money velocity

I've read through questions like: Implications of declining money velocity and noticed this trend has intensified since, with velocity printing the lowest readings in history in the past few months. ...
0
votes
0answers
19 views

Converting nominal exports to real exports: Which Price Index to use?

I want to convert nominal export values to real one. I have GDP Implicit Price Deflator and Consumer Price Index. I would like to know which price index is better to use in order to get the real ...
3
votes
1answer
45 views

Muth-Mills Model

I am exploring the Muth-Mills monocentric city model covered in Brueckner's article. It is given that consumers earn the same income $y$ and buy $q$ housing for a price $p$ at distance $x$ from the ...
3
votes
2answers
112 views

Convex rationalization when the budget sets are segments?

Backgroud: SARP can be defined on general budget set. SARP: Assume for all $B$ the choice $c(B)$ is only one element. If $x_i,x_{i+1}\in B_i$, and $x_i = c(B_i)$, for all $i\in \{1,N-1\}$, then $x_1=...
2
votes
1answer
56 views
0
votes
2answers
44 views

Sunk costs - Book value and Market value

i try to understand the concept of sunk cost and how we compute sunk costs when there is a difference between book and market value. For example, if the book value of assets is ...
5
votes
1answer
72 views

Deriving the Euler equation from a Continuous Time Dynamic Programming Problem (HJB)

Solving for the Euler equation in discrete time is farily straight forward with the use of the Benveniste Scheinkman theorem. However for the following standard Ramsey model: $$\max \int_{0}^{\infty}e^...
1
vote
1answer
49 views

Deriving optimality conditions in the New Keynesian model framework with an undefined consumption function

I am trying to solve the household's optimization problem in the New Keynesian model framework, where utility is given by $$ E_0\sum_{t=0}^\infty \beta^t \mathcal{U}(C_t,L_t,N_t;Z_t) $$ and period ...
1
vote
0answers
21 views

What is the importance of moving seasonality in seasonal adjustment?

Both Stable and Moving Seasonality are computed in Sliding span test (or D8 F-Stat test) and M7 statistics. But what is the purpose of finding out the presence of moving seasonality in seasonal ...
1
vote
1answer
40 views

What empirical evidence is there of distortions when capital gains taxes are introduced or raised?

I have heard that introducing capital gains taxes would create distortions in investments, and that the optimal tax rate for capital gains is actually 0. My question is what observed evidence is there ...
0
votes
1answer
353 views

inflation rate vs interest rate on calculating present value of future money

i use the formula 100/(1+r)^T to calculate the present value of my future money while r is interest rate and T is year. However , for my country , interest rate (...
1
vote
1answer
39 views

Difference-inDifference model with Discontinued Treatment

I have a situation where I observe two groups A and B for three years. Group A never received any treatment. Whereas group B received treatment in year 2 only. I can estimate the impact of the ...
0
votes
2answers
81 views

Why in the quantitative equation: $MV=PY$, $V$ and $Y$ can be taken as fixed?

To equation is \begin{align} MV=PY \end{align} where $V=\frac{1}{k}$. Why $V$ and $Y$ can be taken as fixed or constant? Why can $V=\frac{1}{k}$ too? Thanks in advance
0
votes
2answers
142 views

What would be the economic impact of disallowing the renting of housing?

I'm just trying to think through the implications of the theoretical scenario of disallowing the renting of housing. My goal would be to reduce wealth inequality - as rent is generally a wealth ...
5
votes
1answer
123 views

Consumer Utility Maximization equivalent of economies of scope

Economies of scope captures the idea of having efficiency in variety. I've come across this idea only in producer theory to capture the idea that companies may benefit from their ability to reduce ...
2
votes
2answers
42 views

Effects of change in tax on output

Suppose the government imposes a tax on each unit of output produced of $t. What is the firm’s new profit maximizing level of output? The question suggests the use of comparative to determine how a ...
1
vote
0answers
25 views

Modelling GDP growth rates with an AR(1) process

I am trying to model the growth rates of real output per worker. I read that GDP growth rates are often assumed to be stationary and are modelled using an AR(1) process, so I took logs and then took ...
1
vote
0answers
29 views

Maximum of conditional expectation

I have a statistics question for the insider problem in the Kyle (1985) model: How does one go from $\max\limits_{X} E[(v-\bar{v}-\lambda(X+u))X|v]$ to $\max\limits_{X} (v-\bar{v}-\lambda X)X$ ?
2
votes
1answer
39 views

Total differentiation in a IS curve context

everyone. I'm having a hard time trying to figure out how the total differentiation occurs in this exercise. In this excerpt, from Inflação e Crises", by Affonso Celso Pastore, the author ...
17
votes
1answer
3k views

Are democracies more economically productive than autocracies?

The book The Dictator's Handbook claims in several places that democracies are more productive than autocracies. It's central to their argument of lower taxation rate in democracies giving more wealth ...
2
votes
1answer
46 views

Monetary policy rate and fiscal deficit

A colleague in work mentioned today that Chile is keeping a flat monetary policy rate given "there is a higher expected fiscal deficit". If there is an expected fiscal deficit (i.e., ...
2
votes
0answers
35 views

Strange screening game were FS contracts equals optimal contracts

Consider the setting where a principal hires an agent to do a project. Payoff from project is $\pi = \beta e$, where $\beta \in \{1,2\}$ is the degree of the agent's talent and $e \in [0, +\infty]$ is ...
0
votes
1answer
36 views

How to calculate inter-annual variation of inflation for a 3 months period?

I have the monthly indexes taken from the National Institute of Statistics of my country (below), then I can calculate its inter-annual variation easily: ((index month year - index same month year - ...
6
votes
1answer
2k views

Doing a PhD Economics without background in formal theorems?

I could really use some advice. I am a new PhD student in Economics and Finance. My background is in economics, and while I did mathematics in my Master's course, it was more data-analysis based ...
2
votes
1answer
150 views

Printing money to put into a Superannuation or UBI fund

It is fiscal policy to keep inflation at between 1-2% (in New Zealand at least) Various tools are used to keep inflation in this range. Let's say the average inflation rate is 1.25% What would ...
2
votes
1answer
90 views

Proof that two utility functions $u(x_1,x_2) \text{ and } v(x_1,x_2)$ with the same MRS represent the same preference

I am having some difficulty proving that two utility functions with the same marginal rate of substitution represent the same preference. I think I need two use some argument related to strictly ...
4
votes
0answers
91 views

Complexity economics and computational economics books recommendation

I'm looking for books in complexity economics and/or agent-based computational economics. What are some good introductory and advanced books in these fields? Thanks in advance
0
votes
0answers
10 views

Inter country currency exchange [duplicate]

This is probably a stupid question as I don't know much about economics, please bear with me. My question is; why can't a country insist on the worth of their currency relative to the dollar. For ...
0
votes
1answer
36 views

How come debts is higher than assets?

Investopedia has a definition about Debt ratio, I do not understand how come Debt ratio can be higher than 1. Because it means that equity is negative (because Total Assets=Debt+Equity).
2
votes
2answers
913 views

Nash Equilibrium in a bargaining game

I've got a question to ask about the Nash Demand game from my assignment. Sarah and Ruth find \$100 on the ground and decide to split it between them in the following manner. Each individual ...
1
vote
1answer
52 views

What do they mean by “bottom line” and why did US IRS turned back 810 millions to IBM? and what do they mean by “unspecified “ layoffs?

In the quarter ended in March, IBM’s revenues rose by 5.1 percent to \$19.1 billion, and its gross profits were up by 6.1 percent to \$8.25 billion. There were a whole bunch of things that affected ...
11
votes
7answers
104k views

How interest rate affects currency

I am quite new to economics. I was reading about changes in interest rates and its effect on currency value. The fact is as interest rates increases, the currency value also increases and vice versa....
0
votes
1answer
51 views

Values of A,K,N,a in Cobb-Douglas function expressing GDP

In many basic macroeconomics textbooks a Cobb-Douglas production function with constant returns to scale is used to express the output of the economy as a function of labor and capital: $Y=AK^aN^{1-a}$...
5
votes
1answer
415 views

Labour-saving vs. Labour-augmenting technical change

I've read a number of posts on the above topic but none refers to published empirical papers. Google searches have been hopeless. Does anyone know of any paper on empirical derivation of technical ...
1
vote
1answer
49 views

Utility maximization: pollution and housing prices

A factory releases a toxic pollutant which causes two types of damage to a representative area resident whose utility function is $U(S,H,x)= a \cdot \log(S) + b \cdot \log(H) + c \cdot \log (x)$ where ...
0
votes
0answers
7 views

What is used for calculating equity multiplier between total liabilities and total debts from Datastream?

Equity multiplier=Total Assets/Total Equity But I did not download the Total Equity but Total Liabilities and Total Debt from Datastream. Therefore I think of calculating Total Equity by using Total ...
1
vote
0answers
19 views

Why do investment adjustment and capital adjustment costs yield different dynamics?

Both the Business Cycle and DSGE literature find that Investment adjustment costs and capital adjustment costs give rise to different dynamics for investment, output, consumption etc. Investment ...
-1
votes
0answers
9 views

About the borrowing costs

when a firm borrows a loan, is it charged at the real interest rate or the nominal interest rate? eg when the nominal interest remains constant, the inflation rises and the real interest falls, does ...
1
vote
0answers
17 views

What is the most important factor in sample selection for time series models?

Is there some convention in sample selection for time series analysis? And what is the most important factor in this regard? I mean, I have seen Kónya, I. (2018) use annual data from 1995–2016 to ...
2
votes
2answers
136 views

Game theory and differential equations

Does anybody know, any (advanced/classic) textbook that combines game theory with differential equations in mathematical economics. Specifically, I an interested in asymmetric information problems.
-1
votes
1answer
101 views

Will economic discrepancy between democratic and authoritarian states decrease over time? [closed]

The most popular explanation for the economic discrepancy between different states is that in the authoritarian states the leaders need corrupt extractive institution to preserve their power. However, ...
0
votes
2answers
52 views

Why do yield spikes reflect badly on tech stocks

Yield spikes are a reflection of market equity valuation. How I interpret this is that there’s real fear that some companies in the market won’t be able to pay their debt. Therefore, bonds trade cheap,...
1
vote
1answer
1k views

How to find the maximum profit in a graph?

We know the maximum profit will occur at the quantity where the gap of total revenue over total cost is largest. But how can we find such gap?
1
vote
0answers
23 views

Stationarity of variables for Local Projections

Should we care about the stationarity of the time series when doing Local Projections? In his website Jorda (the author of Local Projections method) provides a code for doing local projections : https:...
0
votes
1answer
33 views

Multi dimensional Auction in economics

I am following this paper . They have different suppliers and one buyer and They are using auction to select best suppliers Suppliers will submit. suppliers offer a multidimensional bidding on quality ...
1
vote
2answers
660 views

What will be the effect on velocity of money when demand for real money increases?

Suppose that a change in government regulations allows banks to start paying interest on checking accounts. The money stock is the sum of currency and demand deposits, including checking accounts. (...
1
vote
1answer
33 views

What does 'establishment' mean in real estate industry?

I read data on real estate industry and there is a table titled "establishments". The title of it is "number of establishments in real estate for all establishment sizes". Is '...
5
votes
1answer
58 views

The economic impact of corruption

I know nothing about the 'economics of corruption' literature, whether in the medium(fluctuations) or long-run(growth)... Although I've found many surveys (mostly +5 years, and from journals I don't ...
0
votes
2answers
143 views

Change in inventory

Inventory change=last period's ending inventory- the current period's ending inventory. Change in inventory= production of the firm during the year- sale of the firm during the year No doubt in (1) ...

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