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4
votes
2answers
162 views

Is the development of “developing countries” evidence against the idea that former colonial powers owe their headway to exploitation?

There is a recurring narrative (especially but not exclusively in left-leaning circles) that today's "developed nations", particularly Western former colonial powers, owe much of their wealth and ...
1
vote
3answers
1k views

Why do increase in firms profit margins cause cost push inflation?

I read somewhere that this was the case. I get what profit margins and cost-push inflation are, but don't see how increase in marginal profit causes cost-push inflation? Also, how does increase in ...
1
vote
1answer
68 views

Economic Effects of Presidential Candidate Proposal: Pay the same % in taxes no matter what you gain

There's a presidential candidate in USA that promises to change IRS laws in order that everybody pays the same % in taxes, i.e., the rich will pay the same percentage as the poor. This would seem to ...
5
votes
0answers
211 views

Arguments against inheritance tax

One of the arguments against inheritance tax is that it lowers the incentive to work for those close to retirement who have earnt enough money to be comfortable in old age. How much is this offset ...
5
votes
2answers
250 views

Foundational equations or concepts of Finance

For the other sciences it´s easy to point to the most important equations, inequalities, propositions or concepts that ground the discipline. If I want to explain Finance to a physicist say, what are ...
3
votes
0answers
109 views

How does Schumpeter's view of capitalism's demise fit in with the importance he placed on innovation?

Schumpeter is widely remembered for his belief in the power of innovation and entrepreneurship within a capitalist framework. In fact he argues that capitalism owes much of its success to this. Yet, ...
5
votes
1answer
991 views

What are main methods for econometrics of Macroeconomics?

I have a background in Finance and have become pretty interested in Macroeconomics as a graduate student. However the time is limited and I want to focus on econometrics part of Macroeconomics. In ...
1
vote
1answer
418 views

Under what circumstances is an increase in national output called economic growth?

An increase in output can be achieved in two basic ways. The first scenario: Aggregate demand increases, so supply extends. In this way the economy is making more use of its resources, but there is ...
0
votes
1answer
37 views

Estimating causal effect for educated people on wages

I have a problem regarding causation and effect. I have a linear model $ wage=\beta_0+\beta_1educ+\beta_2female+\beta_3hourseworked+errorterm$ When I need to estimate the causal effect for educated ...
1
vote
2answers
412 views

Why Law of Supply indicate direct relation between price and supply?

According to Wikipedia, the Law of Supply states that: an increase in price results in an increase in quantity supplied. However, if the market was overflowing with a particular good (meaning ...
4
votes
1answer
265 views

Elasticity of substitution in Jehle and Reny Advanced Micro (3rd ed) exercise 3.8

Letting $f_i(\mathbf{x})=\partial f(\mathbf{x})/\partial x_i$, ($\mathbf{x}$ is a vector, a commodity bundle, and $x_i$ is a scalar, commodity $i$ in the bundle) show that, $\sigma_{ij}(\mathbf{x})\...
5
votes
1answer
147 views

Road to equilibrium in a basic economic model

I am reading a (macro)economics book which introduces a model of a small, closed economy. Two relations are presented. The IS relation (savings equals investments, or demand equals production) and the ...
0
votes
1answer
50 views

Is there a problem with Inflation-corrected real price?

Consider CPI and PPI, Consumer Price Index and Producer Price Index respectively. Note that many book correct inflation using the above measures. However, I doubt inflation corrected by these values ...
9
votes
2answers
185 views

Are obstructed views a negative externality?

I recently read an excellent paper on the causes of high urban real estate prices in the United States, Why is Manhattan so expensive? Regulation and the rise in house prices (GLAESER, GYOURKO, and ...
1
vote
0answers
41 views

Using variance-ratios as moment conditions in a GMM estimation

I have a few time-series, say ${X, Y, Z}$ at a given frequency, say, yearly. Now I compute the yearly growth rates (ie log-differences): $dx = log(X_{t}/X_{t-1}), dy = ..., dz = ...$ and I compute ...
2
votes
2answers
344 views

Is the loan principal ever delivered in pieces over time?

Not sure if this is the right place for this question but it's more of a theoretical finance question than a personal finance question. So a loan has a principal amount that is given to the borrower ...
1
vote
2answers
369 views

Speed of convergence of output on the balanced growth path

Find how quickly $y$ converges to $y^*$ in the vicinity of the balanced growth path $$ y=Y/AL=f(k); \; y^*=f(k^*) $$ They suggest the hint, write $k=g(y)$, where $g(\bullet)=f^{-1}(\bullet)$.) ...
1
vote
0answers
75 views

Why is inflation rate so low in euro zone?

Inflation rate for Eurozone in December 2015 was 0.2%. In November 2015 it was 0.1%. Meanwhile ECBs target is annual 2% and it seems that ECB does everything it can to push the inflation to the target....
3
votes
1answer
260 views

Prove the uniqueness of steady state

I have a difference equation $$ p_t^{1-\alpha}=\alpha\sigma \left(y-p_t-\frac{(\sigma p_{t-1}^\alpha+b)p_t^{1-\alpha}}{\alpha\sigma} \right) $$ where $\alpha \in [0,1]$ and everything else is $&...
9
votes
5answers
1k views

Why don't Burgers cost 5 cents?

In this blog post, economist Bob Murphy raises a puzzle involving the principle that in a competitive market, the price equals the marginal cost: There’s a general principle from intro to ...
3
votes
0answers
147 views

Partial R2 and contribution of Regressors

I asked a similar question on Cross Validated, but got no answer. The following question is sufficiently different. Consider the following deterministic relationship:$$Y_{t}=C_{t}+I_{t}+G_{t}+(X_{t}-...
0
votes
0answers
45 views

Bibliography International Macroeconomics/Finance

I'm looking for some bibliography for International Macroeconomics/Finance. Any suggestions? Any help would be appreciated.
0
votes
1answer
51 views

How to make deliberate devaluation or depreciation of a currency?

It is said in Wikipedia, that devaluation can be done as monetary policy act. But HOW this can be done if there is no fixed rate? What are actual tools Central Bank can use? One thing I can imagine ...
2
votes
2answers
3k views

In which market structures does the producer employ price discrimination?

I was recently reading up on the Price Discrimination, first second and third degree. Although the author has laid out the concept neatly, there are no connections established between this concept and ...
3
votes
2answers
2k views

What is “inter-temporal smoothing”?

In a recent article about the OECD latest report it reads as follows: Mr White said QE and easy money policies by the US Federal Reserve and its peers have had the effect of bringing spending ...
3
votes
2answers
367 views

Using web scraped data for consumer price indices

Is there information and literature regarding comparative consumer price index methods? Specifically, the web scraping method of index construction?
3
votes
1answer
2k views

Electricity as inelastic good

Could be electricity considered as an inelastic good? I am interested in the electricity delivered to final consumers in member countries of Nordpool Spot (Norway, Sweden, Finland, Denmark, Estonia, ...
1
vote
2answers
6k views

Why does deflation cause banks to increase their interest rates?

I have read that in a deflationary spiral, lower prices cause banks to increase their interest rates. Is this true and what is the logic behind it?
0
votes
2answers
2k views

Consumption function with negative intercept?

I am doing an assignment where I calculate the consumption function of a certain country from empirical data and I am getting a negative intercept. How can this be interpreted because usually, isn't ...
1
vote
2answers
51 views

Conditional Mean and Linearity

The conditional mean of $Y$ given $X$ is:$$E[Y|X]=\int yf(y|x)dy$$ What is the relation to the linear model? I have read somewhere that when X and $Y$ are normal (their marginal ...
6
votes
1answer
16k views

In simple terms: what are the implications of homothetic and nonhomothetic consumer preferences?

I am looking for a simple explanation of the implication of having homothetic/nonhomethetic preferences in relation to consumers' preferences when consuming goods.
3
votes
2answers
149 views

Definition: Extractive Goods (Comtrades HS-Categorization)

I'm currently writing a paper on China in Africa and I'd like to compare Africas Exports to China with its exports to Europe and the USA. More specifically I'd like to find out if the Exports to China ...
4
votes
1answer
257 views

Show that $x(p,w)=w\cdot x(p,1)$ with homothetic preferences

Someone gave me a proof of this, but I am not sure if it is correct. Let $B(p,w) = \{x: p\cdot x \leq w\}$ (the budget set). Then: \begin{align} x(p,w) &= \arg \max_{x\in B(p,w)} u(x)\\ &=\...
4
votes
1answer
36 views

Name for a slightly-stronger than Nash Equilibrium?

As I understand it, a Nash Equilibrium is a fixed point in strategy profile space, in the sense that it is not to any individual player's advantage to deviate from said strategy profile. Is there a ...
4
votes
1answer
82 views

OPEC's market share strategy: What is the benefit of market share in a fungible market?

Coverage of the recent fall in oil prices frequently mentions OPEC's decision to defend their market share, sacrificing price in the process. I understand how market share is important from a ...
2
votes
1answer
188 views

Two asset Markowitz Portfolio Optimization and Capital-Market Line construction for a Given Risk Free Rate

I practice with some excercises about the Markowitz theory. If we have a portfolio with two stocks A and B, with given return $r_A$ and $r_B$, the expected return can be computed as: $r_P= w_A \cdot ...
3
votes
2answers
127 views

The Oil hike of the 2000's: Did it go unnoticed, and why?

I'm reading a macro text book, the authors stated that in the 2000's we witnessed the greatest increase in oil prices ever, even when compared to the 70's oil shocks. To most of us, this fact went a ...
14
votes
1answer
388 views

Barro's (2009) rare disaster model in the AER: How to derive equation (10)?

In Barro (2009) Rare disasters, asset prices and welfare costs Barro develops a Lucas tree model with Epstein-Zin preferences. My question concerns the paper's equation (10). In this equation Barro ...
2
votes
2answers
9k views

What is the difference between shareholder's equity, equity, and book value?

I have been doing some reading and I have found that shareholder's equity is equal to the company's total assets minus its total liabilities. Equity is apparently defined in much the same way. Book ...
6
votes
1answer
121 views

Why doesn't the ECB implement the same fiscal and monetary policy that the FED used to save the US economy?

If the Fed managed to save the US economy with their liberal expansionary policy, why doesn't the ECB follow suit if it is much more efficient in reducing unemployment etc? Also, why did ...
4
votes
1answer
99 views

Why do we use mostly two-tailed Student's t-statistics to find if an explanatory variable is significant in a regression?

Let's assume a standard regression model: $$y=\beta x+u$$ We'd like to test if an variable $x_j$ is relevant in the respect of the model. t-statistics: $$t=\frac{\hat{\beta_j}-b}{SE(\hat{\beta_j})}$$ ...
1
vote
1answer
84 views

RDD, wages, and day of birth

What I am doing: I use the regression discontinuity design (henceforth RDD) to study differences in wages received by people born at the end of the year and by those people born at the beginning of ...
1
vote
2answers
110 views

What is preventing the United States from printing USD to buy up prized assets from foreign countries given that USD is the world's reserve currency?

USD is accepted all over the world. U.S can easily print USD to buy up the most valuable assets from all over the world. Ethics aside. What is preventing the U.S from doing so? What did I miss out?
0
votes
0answers
117 views

Second derivative of Capital stock per unit of effective labour

Let $K=$capital, $L=$ labour, $A=$ knowledge or effectiveness of labour. And put $\mathcal{K} = K/AL$ the capital stock per unit of effective labour. If the following is negative $$ \displaystyle \...
0
votes
1answer
1k views

Violating WARP or not? [closed]

If the only information we had about Goldie were that she chooses the bundle (6, 6) when prices are (6, 7) and she chooses the bundle (10, 0) when prices are (5, 5), then we could conclude that a. ...
4
votes
1answer
177 views

How are disaster effects calculated into GDP?

Assuming no income was lost, only assets were destroyed (e.g. homes), how does disaster event impact GDP numbers? Or otherwise, is losing and rebuilding wealth neutral to GDP (e.g. spending on ...
3
votes
0answers
594 views

With a depreciation of real exchange rate, what happens to the trade balance equilibrium output?

Let the real exchange rate $Q=\frac{P^*e}{P}$, where $P^*$ is the 'world' price level (everything with '*' is of the 'world'), $P$ is the domestic price level, and $e =\frac{\text{Home Currency}}{\...
2
votes
2answers
2k views

How to estimate empirically a demand curve

Suppose I have a small business that sell ice creams. An Icecream cost 2$, and every day I have different values of sales. ...
0
votes
1answer
2k views

Indifference curves passing thru few points [closed]

Tommy Twit’s mother measures the departure of any bundle from her favorite bundle for Tommy by the sum of the absolute values of the differences. Her favorite bundle for Tommy is (2, 7), that is, 2 ...
0
votes
2answers
842 views

Mix of two ads types [closed]

Question still unanswered Ads in the boring business magazine are read by 300 lawyers and 1,000 M.B.A.s. Ads in the consumer publication are read by 250 lawyers and 300 M.B.A.s. If Harry had \$4,200 ...

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