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7
votes
2answers
338 views

Problem with defining liquidity

I have heard multiple times that a consistent definition of liquidity does not exist. The two wikipedia articles describing liquidity (Market liquidity and accounting liquidity) lack a discussion of ...
6
votes
1answer
174 views

Consequences of hyperbolic discounting

In reading the Wikipedia article about hyperbolic discounting, I read that it says that hyperbolic discounting created strange consequences: But note, the time inconsistency of this behavior has ...
7
votes
3answers
112 views

Empirical studies on network equilibria

There have been a number of papers in the literature (pioneered by Sanjeev Goyal, Jackson, Kranton, amongst others) emphasising the role and importance of network structure in economics, the ...
7
votes
1answer
1k views

The Savage sure thing principle and Subjective utility representation

I have tried reading and understanding Savage's proof of the subjective utility representation, it is too complicated. Is anyone aware of a shorter/more elegant proof of this? It is not a problem if ...
9
votes
5answers
503 views

What kind of economic freeware exists for economics students?

Can anyone recommend some free software for students studying economics for use in senior projects, theses, or dissertations?
6
votes
1answer
2k views

Ambiguous definition of Substitution and Income effect?

Consider the (schematic) indifference curve diagram of two good-quantities Q1, Q2: According to Wikipedia we call the vector AB' the substitution effect and the vector B'B as the income effect. I ...
8
votes
3answers
477 views

The reasons why rouble is collapsing

What can you people say about the reasons why rouble is collapsing? Which one is the main?
8
votes
1answer
185 views

Identification with BBL

In the last few years, the estimator proposed by Bajari, Benkard, and Levin ('07) for dynamic games has been gaining popularity. It is relatively straight forward and is one of the only viable options ...
6
votes
1answer
88 views

Policy relevance of the optimal taxation given uncertainty about social welfare specification

One common criticism in the optimal taxation literature is the specification of the social welfare function. The optimal taxation literature (I have the Mirrlees framework in mind) relies on first ...
5
votes
1answer
1k views

Does immiserizing growth exist outside of theory?

For a course in international trade, our professor touched on the idea of immiserizering growth. He emphasized that immiserizing growth was a theoretical outcome from specialization of trade and did ...
-7
votes
1answer
12k views

Derive the average variable cost (AVC) function and show that, when AVC is a minimum, marginal cost (MC) is equal to AVC [closed]

I have lost all notes for this and can't seem to work it out, although i'm sure it is very simple I apologise in advance! A manufacturer has the following short-run total cost function: $$TC = 100 + ...
16
votes
1answer
227 views

Does merger control really affect market structure?

Pretty much since 1976 (the passage of Hart-Scott-Rodino Act) US antitrust authorities have been reviewing mergers, challenging only 1.8 per cent of the total number of above-threshold notifications (...
6
votes
2answers
800 views

Is risk aversion bounded in CRRA utility?

For instance, Cagetti (2003) estimates ρ > 2 by targeting the median wealth of households, Gourinchas and Parker (2002) find ρ < 2 by targeting the mean consumption of households, Chetty (2006), ...
3
votes
1answer
8k views

Where do remittances come into play in the formula for GDP?

In the classic formula for GDP, i.e., GDP=C+I+G+X-M, where are remittances accounted for? With remittances as high as third of GDP for developing countries, I wonder how they are not explicit in this ...
7
votes
1answer
89 views

Banking System, Canada & US

Why are the way banks are established and spread out in Canada and US so different? Canada: There are only six major banks and most products offered are very competitive. Its almost unusual to hear ...
12
votes
0answers
335 views

Can I refine the set of equilibria in a signaling game to the sender-optimal outcome?

Main question: I've been reading about communication games a lot, and I'm wondering if there are good criteria to select between two separating-ish equilibria. I think of a separating equilibria as ...
1
vote
2answers
404 views

Recover cost function from profit function

How do I recover the cost function from the profit function? Suppose I have $$ \pi(p, w_1, w_2) = p^3 \cdot w_1 \cdot w_2 $$. How do I get the cost function? Using Hotelling's lemma I get the ...
7
votes
2answers
409 views

Why not talk about utility functions on the surreal line when preferences are lexicographic, etc?

I've been reading about the surreal numbers out of curiosity. Though I don't totally understand them, I wonder why I don't see them used more often. Surreal numbers extend the real line to also ...
8
votes
2answers
901 views

When can one safely talk about decreasing marginal utility?

One thing I hear a lot is talk of decreasing marginal utility—the idea being that additional units of a good become progressively less attractive the more units of that good one has already. However, ...
8
votes
2answers
718 views

Extensions of Nash equilibria to games with infinite strategies

In the Jehle and Reny textbook (which I should add I have not read much of beyond a few sections of interest), a theorem stating that there is always a (mixed) Nash equilibrium in finite strategic ...
4
votes
1answer
60 views

Has any country attempted to inflation adjust capital gains before taxation?

Inspired by the answer to a different question I wondered: Can anyone think of a case study example, past or present, when capital gains are inflating adjusted before being taxed. I could imagine ...
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 ...
21
votes
2answers
25k views

How can I obtain Leontief and Cobb-Douglas production function from CES function?

In most Microeconomics textbooks it is mentioned that the Constant Elasticity of Substitution (CES) production function, $$Q=\gamma[a K^{-\rho} +(1-a) L^{-\rho} ]^{-\frac{1}{\rho}}$$ (where the ...
7
votes
3answers
679 views

What is the impact of fracking on oil prices?

I read an article about the recent fall of gas prices in the US claiming that the fall in gas prices was due to the expansion of fracking within the US. The article said that, over the past few ...
0
votes
2answers
124 views

What is the main cause of differences in the costs of living?

Following question is not formulated in technical language of economics, since I am not an economist and I am mostly interested in accessible answers. Yet, I think it goes deeply into theory of ...
6
votes
3answers
146 views

Is foreign-financed Basic Income Guarantee inflationary?

The question came up on comments in Politics.SE: Situation: A government of a country sets up an unconditional Basic Income Guarantee (defined as monthly payments to EVERY resident, unconditionally,...
10
votes
2answers
5k views

What is the purpose of measuring GNP?

I know that the GDP (the value of all final goods and services produced within a country during a given period of time) is useful for determining the productivity of a nation, the size of the nation's ...
10
votes
5answers
805 views

What is the evidence that econometrics has empirical value?

Economies are extremely complex systems with many variables, not to mention the fact that they emerge from the interactions of complex beings. I agree that economies have certain underlying principles,...
6
votes
1answer
195 views

Mechanisms to incentivise social welfare

Suppose there is a set of agents causing loss $l_i$ to themselves and aggregate loss $L$ to the society, both of which can be minimised by their investments $c_i$. The social planner who is concerned ...
8
votes
3answers
554 views

Inflation, cause or result of monetary emission?

The argentine economist Fernanda Vallejos, while trying to protect the government because of the inflation, the following: Inflation is not the result but the cause of monetary emission. As there'...
5
votes
4answers
395 views

Inflation reasons beyond Friedman

I think everyone know this Friedman's quote nowadays: Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the ...
6
votes
1answer
1k views

Pure exchange economy with two consumers and non differentiable utility functions

We have a pure exchange economy, two consumers $A,B$ and two goods $x,y$. The utility functions are as follows $$u_A=\min\{x_A,y_A\}\qquad u_B=\min\{x_B,\sqrt{y_B}\}$$ The endowments are $$\omega_A=(...
6
votes
2answers
154 views

How Do Economists Quantify Contagion?

In the context of international financial crises, what mathematical methods have Economists employed in order to quantify financial contagion? Note: For a working definition of contagion I'll use the ...
11
votes
2answers
1k views

What is the difference between “aggregation” and a “representative agent?”

What is the difference between "aggregation" and a "representative agent?" I'm sorry if I'm not entirely clear on this question, but that's why I ask. It seems to me as if a representative agent is ...
10
votes
2answers
208 views

When should a receiver randomize across actions in a signaling game?

Suppose there is a signaling game with a finite message space $M$, finite action space $A$, and finite type space $T$. Even simpler, all sender types have identical preferences (the receiver just ...
18
votes
2answers
748 views

Why is capital income taxed differently than wage income?

Why is income from capital gains taxed differently than wage income? There are perhaps historical, practical, and theoretical reasons. What are they? (As far as historical reason go, I'm asking ...
5
votes
1answer
150 views

Employment Volatility and the Relevance of Aggregate Wage Rigidity

The Mortensen-Pissarides (MP) framework of search labor is the thing in analyzing (equilibrium) unemployment over the business cycle. Shimer showed that the lack of hires is the big margin that ...
1
vote
1answer
3k views

Federal Reserve vs National Bank [closed]

The US had a national bank during the first few decades after its birth before it was abolished. Today, we have the Federal Reserve. What are the differences between the Federal Reserve and a ...
12
votes
2answers
764 views

$1.25 PPP per day poverty threshold - What precisely does it mean?

As Wikipedia states: In 2008, the World Bank came out with a revised figure of $1.25 at 2005 purchasing-power parity (PPP). (Update: In 2015, this was updated to $\$1.90$ at 2015 PPP.) Wikipedia ...
5
votes
1answer
1k views

What are the effects of the increase/decrease in stock options after an IPO?

Research : As far as I can understand : Stock options are used to increase the capital of companies to realize some projects Shares are divided into two categories : o Free float (which is the ...
16
votes
2answers
4k views

What is the importance of Epstein-Zin preferences?

I've heard that there is a lot of work being done recently that applies Epstein-Zin preferences. The Wikipedia page doesn't seem to be very full. Why are Epstein-Zin preferences important? How does ...
9
votes
1answer
178 views

Banking Regulatory Frameworks, between the 1973 collapse of Bretton Woods and the introduction of the Basel Accords in 1988?

Does anyone know of any work on banking system behaviour, and in particular the governing regulatory frameworks that applied between the 1973 collapse of the gold standard based Bretton Woods system ...
6
votes
1answer
120 views

Empirical ranking of firms based on productivity

I want to rank firms based on a metric, let's call it productivity. Theoretically, this firm productivity measure may be well defined. Empirically, however, data that account for all dimensions of ...
4
votes
1answer
1k views

Marginal buyer/seller as determinant of price

In competitive markets without frictions, the marginal buyer/seller determine the price. To what extent is this argument true in markets where a fraction of the sellers are constrained? Think about ...
7
votes
4answers
172 views

What are different ways of specifying utility and decision making?

This question is related to this question about the Machina paradox and about the expected utility model. In this question, I'd like to know a little more about various or even competing ways of ...
11
votes
3answers
248 views

Influential Theory in the Economics of Poverty

As far as I can tell, research on the economics of poverty is very empirically driven, and this is probably appropriate. What kind of economic theory has been developed though? I'd also be interested ...
7
votes
2answers
197 views

Independence of latent price and market microstructure noise

When examining how Market Microstructure works and affects price formation, there is talked about the: "Assumed independence of of latent price and microstructure noise" From "On the Correlation ...
4
votes
1answer
170 views

Random Choice interpretation

Due to McFadden Economists usually interpret Random Choice, in the population sense, as each DM being drawn from the probabilistic choice rule independently and identically. However, Psychologist have ...
3
votes
3answers
70 views

Can anyone recommend a resource for monthly trade data for Mexico from before 2010?

Can anyone point me to a resource where I can find monthly series data (specifically for 2003-2013) on Mexico's imports and exports in nominal (current) Mexican Pesos (MEP) including broken down by ...
5
votes
2answers
546 views

Oligopolistic producers and retail price wars

Consider an industry with few producers selling differentiated products. The products must be sold through retailers of whom also there are a few and who therefore possess some degree of market power. ...

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