All Questions

Filter by
Sorted by
Tagged with
2
votes
1answer
197 views

Real vs Nominal Value Concept

I am having trouble understanding the meaning of the real value of an economic quantity. The concept is easy to grasp: take a year as a base and adjust for inflation by pricing a commodity with the ...
2
votes
0answers
52 views

Are there any situations where the elasticity version of the Slutsky equation can only be used compared with the regular Slutsky equation?

Regular Slutsky Equation: $$\frac{\partial x_M}{\partial p_x} = \frac{\partial x_H}{\partial p_x} - \frac{\partial x_M}{\partial m} x _M$$ Elasticity Slutsky Equation: \begin{align*}\varepsilon_{x,...
1
vote
1answer
70 views

Put Call Parity

I am walking on this problem set and can really not get my head around question 8. Especially I don't understand what is meant by " - Since “short XPDR” strategy is the same as “write call, buy put, ...
1
vote
1answer
57 views

(tax with) costs to first order

1) What does it mean that something (in this context the taxation) has (or doesn't) costs to first order? So, below is an excerpt from Romer's Advanced Macro (p. 598) with such a statement that I've ...
4
votes
2answers
444 views

Why does the definition of MRS follow from the implicit function theorem?

TRAIN OF THOUGHT 1: From what I understand, $MRS$ is calculated as $$dU = U_x dx + U_y dy =0$$ which by rearrangement yields $$\frac{dy}{dx}= -\frac{U_x}{U_y}$$ So suppose I have $$U(x,y) = \...
2
votes
0answers
100 views

GDP and DEBT/GDP ratio of a Nation [closed]

Imagine following tiny nation. It consist only of 100 people running a car manufacturing plant. The nation imports every resource it needs for manufacturing those cars. It also imports all energy, ...
4
votes
1answer
121 views

Nonparametric estimation: Interaction of two continuous variables

The probability of observing a binary outcome y is a function of two variables, y = f(x1, x2). Both ...
1
vote
1answer
143 views

Labour Productivity Growth and Reallocation of Labour

Using a shift-share methodology, labour productivity growth can be arise from productvity growth within a sector (within effect) or reallocation of labour to sectors with higher productivity (...
3
votes
1answer
298 views

Changing the base year of Real GDP from 2001 Euros to 1990 Geary–Khamis dollars

Estimating regional Gdp in Italy (1871-2001): sources, methodology, and results (Felice, E) This article has Italian historical regional GDP figures, but they are in constant 2001 euros not in 1990 ...
2
votes
1answer
82 views

Doubts in modelling the Arthur(1991) paper: Designing economic agents that act like human agent

I am implementing Arthur's paper "Designing economic agents that act like human agent: A behavioral approach to bounded rationality" from 1991 in JAVA and I am having a problem understanding one part ...
13
votes
2answers
4k views

Larry Summers on the causes of secular stagnation

In an influential speech on November 8, 2013 at the IMF Annual Research Conference, Larry Summers suggested that slow economic growth in the years following the 2007–2008 financial crisis might be due ...
2
votes
2answers
69 views

Trading in the presence of priorities

Suppose there is an airline that wants to sell 200 seats in a flight. It can either sell them as business class or as economy. Ideally it would sell all as business class, but it is willing to give ...
3
votes
1answer
72 views

Capital in a credit frictions model

I won't go into detail of this model because it's really just one point that i'm confused about. This question is based on a model by Matsuyama (2007). Agents are deciding whether to invest in a ...
5
votes
1answer
492 views

Instrumental variables for minimum wage

I was wondering if there is a classic instrument for minimum wage as there is for schooling or other variables. If so, how does it fares with respect to most established designs like spatial ...
7
votes
1answer
269 views

Compute evolution of a distribution over time

We have a population of people with different age $a$, time is indexed with $t$. There is a rate at which people die, $d(a, t)$. For simplicity, ignore births. I want to compute the evolution of the ...
8
votes
2answers
545 views

Is evolutionary game theory a useful modelling tool?

Has evolutionary game theory ever been used to successfully describe an ecosystem or a reasonably closed subsystem of the economy? A frequently used example is about side-blotched lizards but I don't ...
9
votes
1answer
223 views

Are there papers in evolutionary game theory that are influential in economics?

The concept of evolutionary game theory has been around for about forty years. The mathematical details are worked out quite well. Yet this discipline is usually a side note in game theory classes and ...
1
vote
1answer
59 views

Computing the continuous time survival rate

We have a population of people with different age $a$, time is indexed with $t$. There is a rate at which people die, $d(a, t)$. For simplicity, ignore births. I want to compute the evolution of the ...
6
votes
1answer
207 views

Shopping example in Kőszegi / Rabin (2006)

In "Section IV Shopping" of Kőszegi / Rabin (A model of reference-dependent preferences, QJE 2006), the example of consumer buying a pair of shoes is given. They claim that "her disutility from ...
5
votes
1answer
172 views

Why can't I use TMoLM for this bliss point problem?

I am having difficulty with a particular bliss point problem. The basic issue I have is my approaches seem flawed and I can't tell why. The equation is $$U(x,y) = 36x -4x^2 + 6y-2y^2$$ subject to ...
9
votes
2answers
9k views

How can nominal interest rates be negative?

It used to be (and perhaps still is) standard to teach in economics classes that the nominal interest rate cannot possibly be negative. So why have some nominal interest rates gone negative? Quote ...
7
votes
1answer
1k views

Benefits of a cartel among firms

Suppose I have $n>2$ firms selling differentiated products. These firms form a cartel for the price. The cartel has size $n_c$. Let $\pi_{i,m}$ be the payoff of a firm $i$ outside the cartel and $\...
2
votes
2answers
1k views

How do saving and investment work in macroeconomics?

It is stated that saving equals investment. However, suppose the interest rate rises and people save more. However, businesses will borrow less so investment decreases. Hence investment is less than ...
1
vote
0answers
772 views

Government using tax to cover for spending without increasing inflation

If, at full employment, the government wants to increase its spending by 100 billion without increasing inflation in the short run, it must do which of the following? Raise tax by more than 100 ...
1
vote
1answer
189 views

Stagflation and the Labor Force

Which of the following best explains how an economy can experience stagflation. Women and teenagers stayed out of the labor force. Negative supply shock cause the factor prices to increase. Official ...
9
votes
1answer
196 views

Matching Theory: Search Time

Consider the standard Diamonds coconut economy. One could imagine that people who search longer, have a different likelihood of matching someone to trade with. Has there been something done akin this ...
2
votes
1answer
129 views

ARCH Model - Expectation of Absolute Value

I have a time series model: $$y_t = \sigma_t \epsilon_t$$ $$\sigma_t = w + \gamma|y_{t-1}|$$ Where $\epsilon_t$ are i.i.d normally distributed with mean zero and variance one. Suppose t = $0, ±1, ±...
8
votes
3answers
322 views

What determines the exchange rate of two fiat currencies if the supply of each is known?

In this blog post, economist Steve Landsburg posed a question about the value of Bitcoin which he didn't know the answer to. Imagine a future in which Bitcoins (or some other non-governmental ...
2
votes
1answer
2k views

Walrasian Equilibrium under Leontief Preferences

There are two people in the economy, A and B. Both have the utility function: U=min{x,y}. A has an initial endowment of (x,y)=(50,100) and B has (x,y)=(100,50). I know how to draw the Edgeworth box ...
12
votes
3answers
958 views

Why does China buy so much US treasury debt?

What is the reason that China buys so much US debt in form of Treasuries? How does this help the Chinese economy? It seems they are willing to give money to USA so USA economy can function better (...
1
vote
0answers
47 views

How much was it going to cost to pay Bombardier a premium to restart production of Mark I trains? [closed]

I read many web pages discussing the future plans of the Scarborough RT and the cost of plans they were planning to do but not the cost of the premium they decided not to carry on with. Without ...
4
votes
2answers
653 views

Oil Price Chart Scale

I found the axis on the following graph of crude oil prices over 1950-2015 from MacroTrends surprising. The y-axis labels are 20, 40, 60, 80, 100, ...but they are not equidistant. Why?
6
votes
1answer
648 views

How does the core relate to strong equilibrium?

An allocation is in the core if there's no coalition that blocks it. A strong equilibrium (Aumann, 1959) is a Nash equilibrium in which no coalition, taking the actions of its complements as given, ...
1
vote
2answers
178 views

An increase in Japan's demand for US goods would cause the value of dollar to appreciate?

An increase in Japan's demand for US goods would cause the value of dollar to appreciate? Why is that? The official answer is "Japan will buy more U.S. dollars." However, my thought was that isn't it ...
14
votes
1answer
11k 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)}...
3
votes
2answers
107 views

Effect of Strengthening US Dollar on Commodities

Many commodities are prices in US dollars. If the Dollar strengthens, then commodities (in non-US countries) will become more expensive. From the consumers' (suppliers') point of view, this should be ...
2
votes
0answers
456 views

AS-LM Model and derivation of the LM curve

When we derive the LM curve, we assume that supply of money is exogenous. However, let's say the central bank has some target interest,r1, and it adjust supply of money to keep interest rates equals ...
4
votes
0answers
58 views

Post-redistribution Lorenz curve comparison with reranking in R

Using R, assume the population income for N= {1.. 7} looks like $X_1$= c(1,3,5,7,7,19,21). Use the Lc() function from the "ineq" package to plot the corresponding Lorenz curve $L_{X_1}(p_1)$. Next, ...
0
votes
2answers
90 views

Are any of these tax dodging schemes actually realistic or exclusive to billionaires? [closed]

So there's been quite a bit of fuss over how the rich supposedly pay lower taxes (proportionally of course) than regular, hard-working Americans because of various tax schemes that "let the rich get ...
1
vote
0answers
179 views

Are there good step by step math intense books substitute for greene's and woolridge Econometric Analysis

Greene's book is a drudgery to read book since it is theoretically based however does not provide what a theoretical book should provide especially on poorly explained the statistics definition both ...
3
votes
1answer
121 views

What is the market value of an object over time?

Recently many news articles mentioned the new luxury car Maybach Exelero. Only 2 cars have been manufactured. Moreover, one of the cars has been sold for 8 million dollars, which makes this car one of ...
1
vote
0answers
285 views

A Perfect Bayesian Bargaining problem

Thought I'd post interesting questions that come my way to try and boost activity! A seller and a buyer negotiate over trade of a single indivisible good. The good is either of low quality (in which ...
2
votes
0answers
350 views

Probability of states of nature

I've been given the following question and would really appreciate any help on part a. I've looked over all of my resources for this course and we have always been given the probability of the ...
3
votes
1answer
50 views

Composition of EEX energy prices

I am working currently on EEX energy price data from Germany and so far I couldn't find out, if the prices already include taxes and the German Renewable Energy Act feed-in tarif (EEG-Umlage). I ...
4
votes
1answer
95 views

VAR inversion - looking for a good resource

I am having trouble with something that should be pretty basic. I need to invert a VAR (vector autoregression). Everything I have read just brushes past the actual inversion process, taking for ...
13
votes
4answers
7k views

Why does any treasury / central bank hold gold?

I know the US treasury is slowly selling its gold reserves, but what is the actual mission and purpose when it comes to the holdings? What is the reasoning behind the slow rate of liquidation? I have ...
9
votes
1answer
289 views

What does Battigalli really mean by “Players can not choose strategies, they can only choose actions.”?

In this video (from 7: 30 to 9: 00)on Youtube, Battigalli mentions the state of world for a simple three-legged centipede game, which, in his own word, is "$\ldots$a description of everything ...
4
votes
1answer
3k views

Symmetric and asymmetric preferences

I encountered a question where it was given that the consumers had asymmetric preferences. I couldn't find the definition of the term in any of the microeconomics book available to me. Can anybody ...
2
votes
1answer
458 views

Would a world-wide currency be a good idea? [duplicate]

While every country has it's own political ideals, enforcing laws and rules, in an ever more globalized world, I believe the idea of fragmented economy is limiting big growth opportunities while ...
3
votes
2answers
149 views

Does working abroad cause less unemployment however small?

The context of this question arises from people in third world countries going abroad to work. Often they are seen as money-hungry people who don't love their country (unless they are, say, physicists ...

15 30 50 per page
1 165 166 167 168 169 186