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0answers
67 views

OLS estimator panel data

I need to show that the residuals from the regression of $x_{it} - \bar x_i $ on a constant and $\bar x_i $ is just $x_{it} - \bar x_i $ itself. By stnadard OLS regression results, in the simple ...
3
votes
1answer
1k views

A graphic calculator for simple microeconomics problems

I can do simple calculations in micro-economics, such as: given the utility function of a consumer, calculate his demand curves; given utility functions of two consumers and initial endowment, ...
0
votes
1answer
95 views

Principal Agent Question Private Benefit

If an agent can take action which impacts social welfare in a noisy way, the private net benefit of the action is $P(x,t)=x-s(\frac{x^2}{2} + t)$, $s$ is $(0,1)$ How can I determine the privately ...
2
votes
2answers
70 views

Human Capital and Investment into Children

Famous labor economist James Heckman made the argument that given money for investing into educating people, we should invest into young children, and pretty much only that age group, because they ...
3
votes
1answer
47 views

Removing a degree of freedom from relative utilitarianism

Relative utilitarianism takes utilities as reported by agents, rescales them so that, for each agent, the alternatives have utility values between 0 and 1, and then chooses an alternative to maximize ...
1
vote
1answer
189 views

Historical returns for popular American funds over 20-30 years?

I have seen charts like this one showing the return for the past 100+ years cited as evidence why one should invest in stocks for their retirement. I don't disagree with that, but realistically, ...
9
votes
4answers
898 views

Should Costs of Travel to Buy Goods be Regarded as Transaction Costs?

Within the approach of New Institutional Economics associated with Oliver Williamson and others, emphasis is placed on transaction costs as a key factor in explaining why different forms of economic ...
2
votes
2answers
84 views

Correlation over time, panel data variable

I think my question seems to be quite simple, but I cannot figure out a solution. I have panel data with about 1000 different people over 10 years. Standard panel regression is not the problem, but I ...
3
votes
2answers
389 views

Will a Free Software Society ever become a reality?

I have gone through this question regarding the economic sustenance of the GNU Software and I think it is the foundation of my question. Below is a small excerpt from the GNU Website which states the ...
4
votes
3answers
90 views

Can lower working hours beat unemployment?

The common sense reasoning is downright simple: if X hours of works are needed per month, and Y people are available to work, give each person X/Y hours of work each month. I understand that there ...
2
votes
1answer
128 views

Analytically tractable Ramsey model: how to solve ODE for optimal trajectories

In Brunner and Strulik (2002) the authors claim, that the solution of \begin{align} \dot c &= \frac{c}{\sigma}(\alpha k^{\alpha-1} - \delta - \rho)\\ \dot k &= k^\alpha - \delta k - c \end{...
7
votes
3answers
885 views

What are good books about monopolies and market failures?

Is there a good undergraduate level book specifically about economic monopolies and market failures?
0
votes
0answers
74 views

Government Spending, Econimic Growth Correlation

A major problem when testing hypothesis in economics is the lack of historical data. Is there research into the correlation between long term economic growth and government spending, that is based on ...
2
votes
1answer
504 views

Do the partial derivatives of the compensated demand have an interpretation?

When obtaining the Marshallian demand from a utility maximization problem we have a classification of normal goods, inferior goods, Giffen-goods, etc.. These are related to the first derivative of the ...
0
votes
3answers
305 views

Is an increase in the money supply (by buying government bonds) recorded in bank deposits or bank reserves?

When the central bank pays 100 shekels for a bond held by the public, it is assumed that the 100 shekels are deposited. In this case, shouldn't it cause a 100 shekels increase in the bank deposit ...
7
votes
3answers
724 views

What is the average economic value of a human life?

What is the economic value of a human life? If there are multiple methods to use in calculating, what are they, which method is preferred, and why? Considerations/sub-questions on methods A. Is the ...
4
votes
2answers
103 views

Is it possible for a Central Bank to escape from a deflation trap by 'hiding' information?

I'm reading this book on macroeconomics. When determining the nominal interest rate, the Central Bank has in mind its real interest rate goal. By the Fisher Equation: $i_t=r_t+\pi^{E_{CB}}_{t+1}$, ...
3
votes
1answer
221 views

Gravity Equation Interpretation

I have a question about the gravity equation. In the Feenstra textbook, on page 144, it is stated that In the monopolistic competition model [...] the countries are completely specialized in ...
1
vote
2answers
141 views

Does the Samuelson condition assume all the prices for the private goods are the same?

Suppose I have two agents with utility functions $U_i$ and $U_j$ and budgets $p_x x + p_g g = m_i$ and $p_y y + p_g g = m_j$. If I solve a social planner UMP, I will get for my g FOC (after plugging ...
2
votes
1answer
61 views

Panel data, simple rearrangement?

Consider the Correlated Random Effects model $y_{it} = \alpha + x_{it}\beta + \bar x \gamma + w_i + \epsilon_{it} $ where $x_{it}$ is a scalar explanatory variable. The correlated random effects GLS ...
2
votes
1answer
2k views

Difference between 'ideal variety' and 'love of variety' - International trade

What really is the difference between the "ideal variety" (Lancaster) of a differentiated product approach and the "love of variety" (Dixit and Stiglitz) approach?
1
vote
3answers
519 views

Why isn't the Fed funds rate greater than interest rate on loans to the pubic

First of all, fed funds rate is the rate banks borrow reserves' from each other. Interest rate on loans is the rate the bank charges to public for its loan. From one line of logic, we think of the ...
3
votes
1answer
241 views

Monopoly second degree discrimination - two part tariff

In a Monopoly with second degree discrimination - two part tariff will the consumer with higher demand always pay a higher entrance fee and lower unit price than the cunsumer with lower demand or is ...
4
votes
2answers
107 views

Is the standard of living of poor & middle class people higher than in the past?

I really hope this is not opinion based. I am just looking for numbers, links, straightforward proof if possible that the lifetime we are in now, this decade, most of us are living better than in the ...
2
votes
0answers
183 views

The pricing of complementary goods if one of them is purchased only once

Sorry for asking a homework question, however, I'll try to generalize it as much as possible for a future use. There are two complementary goods (A and B). B is produced under perfect competition, ...
4
votes
3answers
264 views

What keeps minimum wage rates in balance?

I would posit that the minimum wage is determined more on a political than an economic basis. The fact is that there are more wage earners than business owners and, generally speaking, the wage ...
9
votes
0answers
742 views

How do I compute the relative risk aversion of Epstein-Zin preferences?

$$ \newcommand{\E}{\mathbb{E}} $$ Preface This question is related to this one about the elasticity of intertemporal substitution and this one about the definition of absolute risk aversion. (It's ...
5
votes
2answers
760 views

Calculate the elasticity of substitution of Epstein-Zin preferences

$$ \newcommand{\E}{\mathbb{E}} $$ Let a consumption sequence be given $C=(C_0, C_1,...)$ and let $C_t^+ = (C_t, C_{t+1}, ...)$. Now, suppose I have Epstein-Zin preferences, \begin{align*} U_t(C_t^+) &...
2
votes
2answers
98 views

What Is Social Security Invested In?

As a self-employed business owner, I am paying approximately 15% of my income to social security, yet I keep hearing that they're "running out of money for it." I'm a little confused about this: 15% ...
3
votes
2answers
272 views

Difference between objective and subjective distributions in asset pricing models?

How does one differentiate between "objective" and "subjective" probability distributions in asset pricing models? In asset pricing, economists often make a distinction between the "subjective" and ...
0
votes
2answers
103 views

Do rising inequalities create inflation?

When the "richs"* get richers, the "poors"* get poorer... assuming: h1) a constant volume of money, h2) a constant volume of people, h3) a close separation between the two groups of people, h4) a ...
3
votes
0answers
192 views

SAS: How to do ARIMA procedure with structural break?

So it seems like my data has a structural break in it, using Box-Jenkins methodology and evaluation such as ADF test wont give appropriate forecasts/results if I do not correct for the structural ...
3
votes
2answers
3k views

Identifying Nash equilibria in extensive form game

Is there a systematic way of identifying all (pure strategy) Nash equilibria (not just the subgame perfect ones) in an extensive form game? In the following Entrant v Resident example, there are three ...
3
votes
2answers
68 views

China causing Currency War

Recently there have been reports of China devaluating its currency against the U.S Dollar. I'm a layman and I am unable to understand the need for a country devaluating it's own currency. How would ...
4
votes
1answer
38 views

Prediction market based on LMSR: Sell, or buy other side?

Consider a prediction market with two outcomes (Yes and No) and a scoring rule based on Hansons’s LMSR, i.e. ln(ea+eb), where a and b are the number of Yes resp. No shares sold. Assume that I have ...
1
vote
1answer
609 views

Derive the demand functions: Hotelling-style Model

So I have this economics question that I have been trying for a while now and I can't seem to get the answer correctly. Below is the question and after I will show what I have so far. An explanation ...
2
votes
1answer
370 views

Demand function of a family

Different family members have different utility functions, but All family members consume the same bundle. For example, consider a family $F$ that has to select a bundle of funiture ($x$) and ...
0
votes
0answers
213 views

Finding Pareto efficiency from competitive equilibrium

So to my knowledge, the competitve equilibrium would be Marginal cost= Marginal private benefit. My question is, how would you determine what the pareto efficiency is from the Marginal social benefit ...
2
votes
2answers
45 views

Methods or models to predict activity of clients of a bank?

I'm a Physicist but I'd like to know if there are some methods or models to predict the activity of the clients of a bank. I heard that banks are interested in this sort of analysis so I got curious ...
1
vote
2answers
223 views

Why GDP positive growth does not decrease inflation?

My understanding is : If production increases, it would imply the amount of goods increases as well for the same amount of money available in the market. Because of this, we should see prices of goods ...
1
vote
0answers
242 views

Money Market, LM curve, starting with a change in Interest Rate

Consider $$r=r^*+\theta$$ where $r$ is the domestic interest rate, $r^*$ is world interest rate, and $\theta$ is a risk premium and/or expectation rate adjustment. The economy is small and open, ...
0
votes
1answer
52 views

European Government Bonds correlations [closed]

Why do European Government Bonds 10Yr (or at least some of them) have such a high level of correlation?
5
votes
2answers
117 views

Is inequality increasing? Does it correspond to increasing social harm?

I have a series of related questions. My understanding is. Economic wealth (ie. GDP) per capita is increasing around the world. We can refer to this as 'the pie is getting bigger'. At the same ...
1
vote
0answers
29 views

Reference request on utilization of technology

There are many studies on the rate of adoption and diffusion of technologies. Are there any papers (preferably empirical ones) on the utilization of technology? What I mean by "utilization" is whether ...
1
vote
0answers
43 views

Is there a (mostly) objective study regarding minimum wage and job growth?

I think over the course of the past couple years the topic of wealth-inequality and living wages has become increasingly commonplace, and really one of the most debated topics (among us casuals at ...
0
votes
1answer
24 views

Data source for average effective personal income tax rate?

Anyone know a source for the average effective personal income tax rate for the US. By state also would be great. Definition: average effective income tax rate = (Total income tax collected)/(Total ...
9
votes
2answers
8k views

Bartik Instrument Intuition

I have a question regarding the Bartik Instrument. I understand that this instrument is a particularly important tool that is used in labor economics. From my understanding, this instrument attempts ...
1
vote
2answers
157 views

Profit Maximisation if MC is still falling after intersecting MR

really basic one here, I am just in the process of re-covering old ground. I understand that for any profit maximising firm FOC: MC=MR SOC: MR'< MC' But suppose MC has a minimum beyond the ...
2
votes
2answers
658 views

Measure combining growth and distribution of income

A frequently used measure of economic progress is GDP growth. (There are alternative economic indicators as well, such as the Human Development Index.) But there are problems with GDP growth. For ...
0
votes
1answer
752 views

Is America getting to a point where there are many more people than jobs or money to go around? Are times better or worse than 50 years ago? [closed]

Is America headed to a point of too many people, not enough work? Is life for an average American better than 50 years ago? I have asked about automation in my first question. Then I've asked a ...

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