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5
votes
1answer
134 views

Rigorous proof needed: Acemoglu (Intro Growth) Corollary $2.1.2$

I am reading Acemoglu's intro to modern economic growth. But I am having trouble understanding his proof to a theorem related with stability. Here is the theorem: And here are some related ...
4
votes
4answers
1k views

Method of Lagrange multipliers with random variables

I'll illustrate the issue I'm having with a simple problem. Let $c_1, c_2 \in \mathbb{R}$, and $Z$ a real-valued random variable. Let $u:\mathbb{R} \rightarrow \mathbb{R} $ be a differentiable ...
2
votes
3answers
129 views

A question about Fixed effects estimation

I have a fixed effects model as follows: $Y = x_1, x_2, x_3$, (fixed effect), (error term) Is there any way I can check whether Cov($x_1$, (fixed effect)) is larger or smaller than 0? The panel ...
3
votes
1answer
108 views

If Y=K+C, why the value of a marginal unit of capital is the same of the value of a marginal unit of output?

In a simple model of welfare dynamic optimisation with non-renewable natural resource where: $$ \dot S_t = -R_t $$ $$ \dot K_t = Q(K_t,R_t)-C_t $$ one of the first order condition is that $P_t=\...
2
votes
2answers
202 views

Can there be sensible choice behavior that violates the Weak Axiom of Revealed Preference?

Following the notation of Mas-Collel, Whinston, and Green, consider a family of budget sets $\mathcal{B}=\{\{x,y\},\{x,y,z\}\}$. To make the example concrete, let's let $x$ be a book $y$ be a left ...
0
votes
1answer
617 views

Monopoly's MC, AVC and TVC

I do not quite understand the statement "total variable cost is the area under the marginal cost curve" Does it means MC inserts at the AVC at the lowest point (see picture)? But why AVC is drawn and ...
2
votes
3answers
3k views

What is the effect of Quantitative Easing on the US budget deficit?

Is the deficit getting larger because of QE?
3
votes
1answer
949 views

Equivalence of Definitions of Continuity of Preferences

We have two definitions of the continuity of preferences: Def 1: $\succcurlyeq$ is continuous if for any sequences $\{x^n\} \subset X$ and $\{y^n\} \subset X$, then $n \in \mathbb{N}$ such that, $\...
1
vote
2answers
268 views

What does my lecturer mean by “economic calculation”?

We got this essay question "It is argued that economic calculation should exclusively be based on individual utility maximization but include an altruistic concern for the common good and for other ...
1
vote
1answer
491 views

Questions on supply curve

I need advice on whether on my supply logic is correct. Question 1: Any point on the supply curve indicates the minimum price that a producer must receive in order to supply a specific quantity of ...
1
vote
0answers
146 views

How to solve a variation of Merton's optimal portfolio problem?

Does anyone know how to solve the following problem? I have tried to solve this but I'm lost since I have never dealt with a Stochastic Dynamic Programming problem with many variables. $max_{c_{t},\...
1
vote
0answers
29 views

Coefficient of Variation for Price

Is there any paper/data source on price dispersion that contains coefficients of variation for US commodity prices like gas, bananas, or the like? I would like to get a sense of the distribution of ...
2
votes
4answers
3k views

How does the professional class fit into Marx and Engel's class struggle theory?

I know that in the first part of The Communist Manifesto, Marx and Engles discuss at length the relationship between the Bourgeois and the Proletarians. The former being the owners of the means of ...
0
votes
2answers
113 views

Adaptive expectations

I know expected inflation plays a key role in both the Phillips curve equation and the Fisher equation, but does it also play a key role in Taylor's Monetary Policy Rule? I'm asking this as I have an ...
2
votes
1answer
71 views

Regression Line Method

Suppose we are given a set of observations on income $X_{i}$ and consumption $Y_{i}$ and we plot all the $(X_{i},Y_{i})$ on a graph. We want to draw a sample regression function as close as possible ...
1
vote
0answers
58 views

Consumer based asset pricing model, differentiation problem

Just a small question about the differentiation technique used in the consumer based asset pricing model. I need to maximize the following equation: $U(c_t) + E_t[\beta \cdot u(c_{t+1})]$ $$\begin{...
0
votes
1answer
3k views

Formula for Effective Discount Rate of Discount Rate Series

what is the formula to calculate an effective discount rate of Discount Series? For EX, If Price of Product A is $X and Discount Series is given like 10%,20%,30%,5%,2%. How can we calculate effective ...
2
votes
1answer
160 views

Moral hazard with linear effort and two possible outcomes

Suppose you have a risk averse principal and a risk averse agent with utility functions $v(q_i - w_i)$ and $u(w_i)$, respectively, where $i = \{H,L\}$, and $q$ is output and $w$ is the wage. The ...
1
vote
1answer
37 views

When should a company's revenue and share price grow faster or slower than the economy?

I was listening to a famous investor discuss an investment of his in an interview. He had bought shares in a bank that was quite successful, though it was a small bank. The bank is based in a highly ...
0
votes
0answers
36 views

Helicopter Money: a tax on banks?

In this text of voxEU, the author are trying to explain why helicopter money will not have it's expected effect. For that conclusion they try to explain the different schemes on how Central Banks pay ...
1
vote
1answer
265 views

Domestic Demand, Private Consumption, Public Consumption, Gross Fixed Investment Relationship

I'm reading the IMF's January 2016 Report on Sweden's Economic Indicators, and the top section has the following: Domestic Demand (2012) Percent Change: -0.6 Indented below are: Private Consumption ...
2
votes
2answers
113 views

Theory about supply of money, prices, and output?

"In theory, we should have enough money in an economy so at current prices we can buy all of the goods and services the economy is producing. What economic theory does this remind you of?" On a ...
1
vote
0answers
149 views

Interpreting multiple interaction terms

I'm running the following regression on panel data: $ %Translator MathMagic Pro for InDesign Mac v9.14, LaTeX converter, 2016.9.11 22:27 \begin{array}{l} {{\mathrm{tscorek}}_{\mathrm{i}}\mathrm{{=}}{\...
2
votes
1answer
362 views

Is there any scientific proof that 2%-3% target inflation rate is ideal?

There are a couple of central banks (RBA, Federal reserve for example) that use inflation rate as a key indicator to regulate their official cash rates. Those target inflation rates usually range ...
1
vote
1answer
101 views

Why do Reserve Banks only move in 0.25 basis point 'leaps'

It seems to me that a lot of uncertainty is created by Reserve Banks spending 5 months telegraphing "I'm gonna do it, I'm gonna raise rates", as is currently seen in the USA. This seems to be the ...
4
votes
2answers
13k views

How can I tell if 2 different utility functions represent the same preferences?

I need to verify that $u(x,y)=x^{1/3}y^{1/3}$ represents the same preferences as $v(x,y)=x^3y^3$. Obviously these are completely different functions with different derivatives, so what am I comparing? ...
1
vote
1answer
175 views

Optimal Pricing with Advertising

Below are three different demand curves (i) - (iii), which depend on advertising (A). (i) Q(P,A) = A $\times$ ($\alpha$ - $\beta$P), where $\alpha$, $\beta$ > 0 (ii) Q(P, A) = $\alpha$ + A - $\beta$...
3
votes
2answers
68 views

Matching problem in continuous time

Let's split each period into $n$ intervals. There's a continuum $u$ of unemployed and $v$ of vacancies. During each interval, there is a total of $X/n$ job offers. That means that each unemployed gets ...
1
vote
1answer
632 views

$\alpha$ condition and choice structure

I am trying to prove a statement that if $c_R$ is a choice structure, then it must satisfy Sen's $\alpha$ condition. However, if $X=\{a,b,c \}$, I can construct some choice structure like $c(\{a\})=a,...
3
votes
2answers
7k views

Change in the way unemployment is calculated in the US?

In the last 8 years has their been a change in the way unemployment is calculated? Is there a nuance that has changed in the polling info? Many of my right wing comrades claim the Obama administration ...
3
votes
1answer
2k views

How to show the production function is concave in K and L but not strictly so?

Suppose we have a production function with constant returns to scale. Let us denote it by $F(A,K,L)$ where $A$ is the technology, $K$ the capital and $L$ Labor. Further assume the first partial ...
1
vote
1answer
33 views

Marginal productivity of aggregate labor relation to wage

I know that $f'(l)=w$. But if i have that the aggregate production is $Y=AL^{1-α}$ with $L=N*l$ (The number of workers, $N$, multiplied by the labor force). So basically I want to find an expression ...
2
votes
2answers
67 views

What was the reason behind destorying or re-minting counterfeit gold coins of the same karats as the real ones?

I remember reading about an interesting event which happened in the early 19th century, in the Habsburg Empire. A criminal organization, mainly composed of workers and corrupt administrators at a ...
4
votes
3answers
87 views

Recommended tests do detect breaks in time series

What tests do you recommend for finding breaks in the following time series: log of inward FDI, log of nominal GDP, log of outward FDI from 1980 to 2012?
0
votes
2answers
68 views

How to understand share value vs real worth of the company

When read in the news articles for stock market price, I learned that the share value of a company changes in a year. My question is does the share value really reflect if the company is doing good ...
6
votes
3answers
5k views

How does an increase in the price of “non-wage-goods” increase employment?

Keynes (1936, Chapter 2) says that based on the classical theory, "there are only four possible means of increasing employment", the fourth of which is: an increase in the price of non-wage-goods ...
3
votes
1answer
62 views

The effects of Quantative Easing (QE) on FX rates?

What are the effects of quantitative easing on the foreign exchange rates? If the central bank starts buying debt denominated in domestic currency, I would think that the market would be flooded ...
4
votes
4answers
1k views

How does the economy “detect” if money is removed from circulation?

It is well known that there is a strong connection between introducing more money into an economy and inflation, as well as removing money and deflation. However, how does the economy as a whole "...
1
vote
1answer
75 views

How do the wages affect the employment

If we have a condition where employment is lead by the wages does it mean that a wage reduction will cause unemployment?
2
votes
0answers
21 views

Where does the value of implicit government banking guarantees end up?

Post-Lehman a widespread political agenda has established to minimize implicit government guarantees to banks. However, in the buid-up of new banking regulations, lending to small and mid-sized ...
3
votes
1answer
145 views

Economics of Education: Private School Behaviour

In producer theory, we assume the firm's objective is profit maximisation. Can we make the same assumption when looking at private schools or does this assumption not apply?
2
votes
1answer
267 views

What exactly is a trust?

In my history class, we're studying the Industrial Revolution and how Rockefeller came to dominate the oil industry with his Standard Oil company. According to our textbook, a man named Samuel Dodd (...
-3
votes
1answer
70 views

“Fairness” exists or not in the real world [closed]

What is "Fairness"? Does "Fairness" exist in the world? Thanks, Marx
14
votes
5answers
4k views

When a stock market crashes, how does money just disappear?

I looked it up online (here), but I find it hard to believe that money literally "disappears". For example, if I buy 10 stocks of a toaster company for \$100 per share, and then the stock value drops ...
0
votes
2answers
78 views

Taking logarithms of variables [closed]

It is common to taking logs of variables when perform a regression analysis. But the observations will become negative after logs transformation when it is less than 1. Is this the possible concerns? (...
2
votes
1answer
4k views

Slope of a production function

Let $F(K,L)$ be a production function with variables $K$ for capital and $L$ for labor. The slope of the $F(\overline K,L)$ ($K$ taken constant) is defined as the marginal product of labor ($MPL$) ...
4
votes
2answers
76 views

What level are EU tariffs mostly?

During the entire Brexit debate in the media I never heard anyone discuss levels of tariffs imposed on countries wishing to export there that had no special deal arranged. I then tried to look up ...
1
vote
2answers
250 views

Question about Equilibrium Price

To find the equilibrium price I understand you set $$ Q^s = Q^d $$ and then solve for p. But as P is not indpendently labeled in $$Q^d$$ I am slightly confused how you would go about writing this ...
-1
votes
1answer
53 views

As elasticity moves from negative to less negative, this causes prices to increase and profits to increase

Is there an intuitive way to understand why this is so. I want this explained in a layman's terms. I know negative means they are inversely related, which is what you would expect most items to follow....
0
votes
1answer
176 views

Taxes and the economy as a whole

Does reducing taxes generally lead to better economic performance? Does it lead to slowdowns in the economy?

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