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5
votes
1answer
959 views

Are there data for the evolution of global economic inequality

Please excuse my ignorance of economics. I recently learned about the Gini-Coefficient as a measure of the economic inequality in a country. I have since seen several plots of this coefficient over ...
5
votes
1answer
7k views

How is wealth created? [duplicate]

The production of 'goods and services' and 'innovation' is the usual answer. I feel that doesn't really answer the question. These things can be traded for wealth but they don't generate new wealth. ...
8
votes
2answers
1k views

What is the necessity of the FDIC in the US banking system?

A bank's basic function is to "borrow short and lend long". In other words, it borrows money from depositors over the short term, promising to repay it on demand, while it lends most of that money out ...
8
votes
1answer
14k views

Finding demand function given a utility min(x,y) function

I am confused about a particular point regarding finding a demand function. All the problems in this practice set I am doing have involved applying the method of Lagrangian multipliers. But I am ...
7
votes
2answers
6k views

Imperfect vs incomplete information

What's the difference? To illustrate, please give examples of A game with perfect but incomplete information; and A game with complete but imperfect information. Related.
7
votes
2answers
37k views

How to derive firm's cost function from production function?

I recently learned how to solve the following type of problem using the method of Lagrangian multipliers: Given a consumer with utility function $u(x,y)$, wealth $w$, prices $p =(p_x,p_y)$, budget ...
7
votes
2answers
388 views

Why is the inverted yield curve a good predictor of impending economic recession?

The inverted yield curve has often been cited as a good predictor of impending economic recession. What are the reasons to explain why is it a good predictor? Is the inverted yield curve a cause or ...
6
votes
1answer
504 views

How does US (its economy, banks, industry) profit from dollar being the “standard currency”?

How does US (its economy, banks, industry, "finance industry") profit from dollar being the "standard currency"? I am not seeking "ideological" explanations, but explanations of the mechanisms ...
3
votes
1answer
4k views

(Preference Relation/Set) Continuous $\succsim$ imply closedness of upper and lower contour sets

[ADDED/MODIFIED] : I have put my proof where the commodity space is simply $\mathbb{R_+}$(e.g. nonnegative reals) for simplicity below. Please share your 2 cent. I have put words to aid my own ...
3
votes
2answers
1k views

Why is modest inflation a good thing? [duplicate]

I have been reading a BBC news article about inflation in the UK, which is saying that inflation has recently become negative (http://www.bbc.co.uk/news/business-33147660). The article suggests that ...
2
votes
2answers
134 views

How is the Corona $2 trilion stimulus package going to be financed?

Perhaps this is a simple question but as a non-US citizen I don't understand how the US government is going to finance the $2 trillion stimulus package to combat the economic damage due to the Corona ...
14
votes
2answers
3k views

Available code for computing solutions to matching algorithms?

The question of designing matching procedure (between high-schools and students, med intern and hospitals, kidney donors and receivers,...) has been widely studied by economists and vastly contributed ...
8
votes
2answers
1k views

Alternatives to Pigouvian tax

Two common drawbacks of Pigouvian subsidy mentioned in the literature are related to monetisation and measurement of social cost (Baumol) and reciprocity of social cost (Coase). What alternatives to ...
7
votes
2answers
2k views

Is the economy a zero-sum game?

Theoretically speaking, if all the Earth's inhabitants were to save money and invest, is it possible for everybody to get, let's say, a 4% yearly return for everyone? Is the economy a zero sum game (...
7
votes
2answers
2k views

Why do top professional sport players get usually paid so much?

I'd like to find an answer to this question as I can't see how something like this can be happening. I can see three reasons that they would earn that much but any of them if thought better is wrong. ...
4
votes
6answers
486 views

Have automation and technological advance been shown to have a positive impact on society and the economy or a negative one?

My friends and I, 2 of which are computer science majors think it is worse because is humans can't work and thus afford necessities, how will they survive? The definition of automation: the use of ...
4
votes
1answer
88 views

Multiplicative factorization of stochastic growth time series--solving for an eigenfunction/eigenvector

I'm trying to understand the tools used/presented in Lars Hansen's Econometrica paper "Dynamic Valuation Decomposition within Stochastic Economies." In a part in the paper, Hansen introduces a long-...
4
votes
2answers
13k views

Does GDP count both the investment and the house rental?

Suppose you bought a new house in the year of 2010. Then the price of the house in counted toward the 2010 GDP. Say then you live in the new house in the following years. So in these years, the GDP ...
3
votes
1answer
565 views

Intuition: Difference in price elasticities of demand due to different bases

Source: pp 91-92, Principles of Microeconomics, 7 Ed, 2014, by N Gregory Mankiw If you try calculating the price elasticity of demand between two points on a demand curve, you will quickly ...
3
votes
1answer
231 views

Inflation basics and understanding

In some new country, there's 1 million credits in circulation, and Product X costs 10 credits. If I were to print, say, 500,000 credits and build a new swimming pool with this, how exactly would ...
3
votes
2answers
448 views

Why doesn't the price of gold drop as mining occurs that produces more gold?

According to my common knowledge, the price should drop when supply increases. Why doesn't the price of gold drop slowly as more gold is produced from mining?
3
votes
1answer
881 views

Showing that production technology exhibits decreasing returns to Scale

The Question Suppose a firm has a production function given by $$y=F(L,K)=L^{1/4}K^{1/4}$$ where L and K denote inputs used in the production of y units of output. (a) Determine whether marginal ...
0
votes
3answers
191 views

Is it possible that the minimum point of a short run cost curve does not touch the long run cost curve?

In the answer to this question, the answerer said "the minimum point of a short run cost curve will be above the long run cost curve". Is it true? If so, how would it be so? I thought that if e.g. ...
0
votes
3answers
127 views

Theoretical market capitalisation of a crypto currency?

Here’s the context. I want to know what the theoretical market capitalisation (say eg $US / Bitcoin times Q the number of coins - it doesn’t have to be Bitcoin) of a crypto currency? Assume that the ...
-4
votes
1answer
73 views

Why won't the Federal Reserve's 2020 quantitative easing cause hyperinflation like in 1921-1923 Weimar Republic? [closed]

Pls ELI5. 2013 was last time I opened macroeconomics textbook! I just have a B.A. economics. On r/Economics, u/ComfortableCold9 asked From your point of view, at what point would we [the USA in ...
41
votes
1answer
25k views

What is structural estimation compared to reduced form estimation?

I've heard a lot of definitions given for structural estimation. But it's never seemed entirely clear to me. Some times I've heard that what one person might call "reduced form" estimation should ...
22
votes
2answers
3k views

Should we expect more structural technological unemployment if growth becomes more limited by natural resources and less by labour?

Technological unemployment, where unemployment arises from (with some oversimplification) workers being replaced by machines, has so far been temporary as new jobs were created that replaced the old ...
33
votes
3answers
2k views

Is a universal basic income possible in the United States?

Is a universal basic income or unconditional demogrant possible in the United States? (For the sake of specificity I have focused the question on the US, though the question is certainly interesting ...
30
votes
6answers
2k views

What benefits do governments receive from not eliminating debt?

Most major economies have substantial government debt; for example among the OECD countries the lowest debt rate is Estonia with around 6% of GDP. Now we may be in a global recession at the moment, ...
14
votes
5answers
827 views

Are there Utility Monsters in Economics?

Economics, especially in the modern school is broadly influenced by the utilitarian concept of utility. More so since the labor theory of value has been broadly replaced by the theory of marginal ...
30
votes
6answers
11k views

Why do celebrities get high wages?

In the youtube video Why We Look down on Low Wage Earners the author argued: "economics states that wages are determined [...] by the number of people willing and being able to do a given job that ...
14
votes
1answer
12k views

How does one derive the elasticity of substitution?

For two goods $x$ and $y$, the elasticity of substitution is defined as $$\sigma \equiv \frac{d\log\left(\frac{y}{x}\right)}{ d\log\left(\frac{U_x}{U_y}\right) }= \frac{\frac{d\left(\frac{y}{x}\right)}...
18
votes
8answers
24k views

Most common programs used by Economists

I recently asked a professor if he was planning on hiring a research assistant for next semester. I thought I'd be a pretty good candidate since I have decent experience using STATA, SAS, SPSS, R ...
10
votes
6answers
5k views

Which are the different Schools of Economic Thought?

It would be great to have a brief but comprehensive list of current (e.g. Austrian) and defunct (e.g Mercantilism) schools of thought in Economics. I think an ideal answer would include: the defining ...
35
votes
10answers
8k views

Why do we need to “get the economy moving again”?

Sorry I have no background in economics but as a computer programmer, I specialise in building models out of simple math and logic, so I hope we can speak the same language without having to get into ...
18
votes
5answers
3k views

Why are real median household incomes stagnant?

This image shows US real median household income. It seems remarkable for its lack of growth over the last 20 years. This has been the subject of much political debate (around the "1%" and "occupy ...
17
votes
5answers
2k views

Unemployment and the Minimum Wage---what are the main counter-arguments to Card and Krueger?

Card and Krueger's paper (AER 1994, "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania") uses a difference-in-difference identification strategy to ...
14
votes
12answers
13k views

If I gain, then someone else loses. Correct?

On a very small scale, it's certainly true that if I gain, somebody else might lose. If I take away my brother's chocolate, then he will lose it, and will most probably not get anything comparable. ...
16
votes
3answers
899 views

Complete Markets in Continuous Time

In the standard discrete time economies with a finite number of states, $n$, a complete markets economy is simply an economy with $n$ independent assets (Think Ljunqvist and Sargent Chapter 8). This ...
15
votes
3answers
19k views

Real Exchange Rate vs PPP rate

I'm having troubles to understand the difference between the Real Exchange Rate and the PPP rate. I know the first one is calculated using a basket of goods and services so that the non-tradeable ...
5
votes
2answers
11k views

Why is the income effect zero for quasilinear utility functions?

Suppose I have the utility function $$U(x,y) = \sqrt{x} + y$$ subject to budget constraint $$p_x x + p_y y = m$$ Then $$x_M =\frac{p_y^2}{4 p_x^2}$$ $$y_M = \frac{m}{p_y} - \frac{p_y}{4 p_x}$$ ...
1
vote
7answers
1k views

Piracy/File sharing - Why aren't songs, movies or ebooks given for free (+ads) like TV?

Question: Why aren't songs, movies or ebooks given for free (+ads) like TV? i. Sub-question Every minute, people are pirating and there is no stopping that. If people see 0.99 for a song on iTunes ...
15
votes
4answers
5k views

Is Malthusian theory of population growth being realized?

You probably are familiar with Malthus' Theory of Population Growth. If you are not, Malthusian model has the following mathematically form: $$P(t) = P_0e^{rt}$$ A basic graphic representation is: ...
7
votes
1answer
206 views

Stock pricing with cross ownership

Cross-ownership is a phenomenon where companies own parts of other companies they do business with. An example: Two companies are now involved in the diamond operation, the mining group Anglo-...
7
votes
1answer
2k views

What are the pros and cons of eliminating corporate taxes?

I recently heard a story on npr about economic policy changes that both liberal and conservative economists definitively agree on. Among other things, complete elimination of corporate taxes was ...
5
votes
2answers
787 views

Is money capital?

The Oxford English Dictionary defines "capital" as n. economic goods (e.g. railways, ships, machinery, buildings) destined for use in production (as opposed to consumers' goods). Historically, the ...
3
votes
1answer
162 views

What is the appeal of DSGE models?

As far as I understand people like them, because they fit the data quite well when compared to VAR's for example while also having an economic interpretation. They appear to explain observations in a ...
3
votes
2answers
14k views

Why does the Balance of Payments have to (more or less) equal zero

It seems to me that the non-reversible transactions included in the current account, and the reversible transactions included in the capital and financial account, are unrelated, and should therefore ...
2
votes
1answer
222 views

Resources to improve my economic intuition

I am trying to improve my economic logic skills and ability to think about day-to-day issues in the systematic way economics and decisions science approaches scarcity or optimization. A simple ...
14
votes
1answer
634 views

Have there been instances where economists have advocated a trade embargo?

Due to Comparative Advantage, it is generally accepted among economists that free-trade is the best policy for a country and increases the standard of living for the citizens of that country and the ...

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