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79 views
+50

Money transfers from A to B - in what proportions

I have been thinking about how money is kept moving, being transferred from A to B. And when I say A to B I don't just mean purchasing finished goods, I mean absolutely any transfer for any reason. So ...
1
vote
0answers
22 views

Is it possible to pay the same amount health insurance companies pay for a doctor's visit in the US

I understand that large insurance companies demand to pay a fixed percentage of the walk-in rate. So for clinics to be in-network, they need to set their walk-in rate stupidly high. Ignoring for a ...
1
vote
1answer
45 views

Optimal consumption for infinite number of periods and exogenous income

I have the following optimization problem: $\max_{\{c_t, s_{t+1}\}} \Pi_{t=0}^\infty c_t^{\beta^t}$ $\text{subject to } \space c_t + s_{t+1} = y_t + (1 + r) s_t \text{ and } s_0 = 0$ How do I find ...
2
votes
1answer
23 views

$E[F_T] = F_0$ implies $p = \frac{1-d}{u-d}$? or is implied by?

From Ch 12 in Hull's OFOD, we compute the risk-neutral probabilities for a futures contract: Later in Ch 17, futures options are valued, and we have the same result: In relation to Chapter 16 and 17,...
1
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0answers
11 views

Arbitrage free implies complete market in general binomial model?

In Tomas Björk's Arbitrage Theory in Continuous Time, there exists this proposition It seems that to show that the model is complete, we must show that the claims are reachable, i.e. we must find ...
1
vote
2answers
72 views

Does the supply curve always slope up?

I was working through a thought experiment which appears to violate the Law of Supply (i.e., that supply curves are non-decreasing). Suppose that a worker is paid by the hour and, given his hourly ...
7
votes
7answers
6k views

Why does economics escape Godel's theorems?

I've seen many professors say that Godel's incompleteness theorems don't apply to economics. Of course I've seen others like Yanis Varoufakis who has on record said that many economics papers defy the ...
0
votes
0answers
38 views

Estimate a Monetary Policy Reaction Function with Generalized Method of Moments

I want to estimate a Monetaryu Policy Reaction function with GMM. I have well understood how to estimate a distribution (e.g. the normal distribution, the log-normal distribution, and so on) with GMM. ...
1
vote
1answer
44 views

Question on a passage from N.OKISHIO's Constant and Variable Capital

Sorry if this a dumb question, I am an undergrad economics student and am currently reading this paper from Okishio on the Marxist concept of Constant and Variable capital, my issue is on this ...
4
votes
1answer
764 views

Where can I find lorenz curve of countries?

I have been able to find values of Gini coefficient but have not been able to find their corresponding lorenz curves.
1
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0answers
12 views

Is the yield on high coupon-bonds more likely to be higher than on low-coupon bonds when the term structure is upward or downward sloping?

Currently I'm learning about the principles of corporate finance. More specifically I'm learning about valuing bonds. I have the follow question: Is the yield on high coupon-bonds more likely to be ...
-1
votes
1answer
30 views

Interaction of redistributive taxes, monetary policy and the growth rate

While studying macroeconomics, interaction with taxes are not seen to importantly. I am though interested in an interaction with redistributive taxes (such as the income or the inheritance tax rate), ...
4
votes
1answer
119 views

Defining the set of strategies, mixed strategies and the simplex set

Suppose that we have a two players game, where $(S^i)_{i=1}^2$ denotes the set of pure strategies for each one. The set of mixed strategies of player $i$ is denoted by $\Sigma^i=\Delta(S^i)$ while $\...
1
vote
1answer
89 views

WARP implies SARP: A 2 Good Case

I am considering an example where there are two goods and three budget sets $(\mathbf{p}^{(n)},w^{(n)}),n=1,2,3$. If we assume $\mathbf{p}^{(n)} \cdot \mathbf{x}(\mathbf{p}^{(n+1)},w^{(n+1)}) \leq w^{(...
-1
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0answers
20 views

The Fundamentals of Economics [closed]

The great American poet Carl Sandburg wrote, “Time is the coin of your life. It is the only coin you have, and only you can determine how it will be spent. Be careful lest you let other people spend ...
4
votes
1answer
54 views

Dynamic programming in infinite horizon model

Using an infinite horizon model, a dynamic programming approach uses a fixed point to solve the model: $V = \Gamma(V)$. How do I interpret the meaning of $V$? For example, when we decide a investment ...
1
vote
1answer
20 views

How would I calculate the quantity demanded of a product with price elasticity given and price change given? [closed]

"The price elasticity of apples is -0.5. When the price of apples is $2, consumers demand 500 apples a day. If the price of apples rises to $3, how many apples will be demanded?" I really ...
0
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0answers
11 views

How to compute rate of growth in real GDP from GDP deflator and growth in nominal GDP [closed]

Suppose, current year gdp deflator is 110, nominal growth rate of gdp is 15%, what is the rate of growth of real GDP?
1
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0answers
33 views

No claim whether data is stationary or non-stationary, but OLS is still applied?

I am reading this famous paper 'Taylor’s Rule and the Fed: 1970–1997', and there is no check for stationarity, non-stationarity, integration or cointegration of the data, but the author just use OLS. ...
1
vote
1answer
32 views

How is the intertemporal budget constraint derived from all intratemporal constraints

Suppose an agent receives a fixed (exogenous) income every period, $y_t$, and can either spend it on $c_t$ or save it/borrow ($s_{t+1}$). Suppose also that the agent starts off with no savings or debt....
4
votes
1answer
74 views

Labor market discrimination - help me understand this passage in call-back study

I'm reading up on discrimination in the labor market. In this study by Bertrand & Mullainathan (2004) they note the following: Perhaps the skills of African-Americans are discounted because ...
5
votes
1answer
83 views

Variance Decomposition of Wage Equation

I am reading two recent papers studying between-firm and within-firm wage inequality, Barth et al 2016 (hereafter BBDF) and Song et al 2019 (hereafter SPGBV). I am confused by the different variance ...
0
votes
3answers
60 views

Why does a risk-return relationship that has historically been positive confirm risk averse investors?

As I am reading through a corporate finance textbook I came across the following figure that plots the relationship between risk and return for different asset classes: The textbook states: Figure ...
5
votes
4answers
151 views

How could real house prices tend to rise in the long-term?

It makes sense that house prices increase above the risk-free rate due to their risky nature and historical evidence and conventional wisdom seems to back up the idea that real house prices tend to ...
0
votes
0answers
25 views

How could house prices tend to rise in the long-term? [duplicate]

It makes sense that house prices increase above the risk-free rate due to their risky nature and historical evidence and conventional wisdom seems to back up the idea that real house prices tend to ...
0
votes
2answers
30 views

What are the benchmarks for parallel trend test in Difference-in-Differences?

For parallel trend assumption in Difference-in-Differences (DiD), normally which benchmark we normally use to judge whether the parallel assumption is being satisfied? From this answer from @1muflon1, ...
0
votes
1answer
39 views

Calculate hicksian demand with utility function (with restriction)

$U(x_1, x_2) = 1/2 * x_1 $ I am trying to calculate the Hicksian demand when when $U(x_1, x_2) = 2$ and the value of the minimum expenditure when $p_1 = 9$ and $p_2 = 16$ For the hicksian demand I ...
2
votes
0answers
27 views

Strategy definition in an extensive form game

How a (pure ) strategy is defined in an extension form game with information sets? I would like to have both an intuitive and a formal definition. Thank you in advance!
5
votes
3answers
1k views

Is climate change an economic question?

The assumption that the Keeling Curve can be approximated with a function $$k=A+B\cdot e^{\alpha t}$$ leads to a solution with $A=258.6$, $B=4,243\cdot 10^{-13}$ and $\alpha=0.0166$ with a high ...
0
votes
1answer
61 views

Calculate income and sustitution effect from utility funcion

Utility function $U(x_1 , x_2) = x_1 + 4 * x_2 $ $ p_1 = 3, p_2 = 8, m =120 $ $p_2$ changes from $8$ to $10 $ How can I calculate the income and substitution effect. I first thought about calculating ...
3
votes
0answers
57 views

Bootstrapping standard errors in SMM estimation

I have estimated a number of key parameters in a model by the Simulated Method of Moments. So far, I have computed asymptotic standard errors (that rely on computing numerical derivatives, where we ...
1
vote
0answers
33 views

How the Fed and Treasury coordinate on liquidity management

On top of the Fed's USD120bn monthly treasury/MBS purchases, the drawdown in Treasury issuance over the last year has also added over USD1tr to the system. The premise is, faced with drawn-out debt ...
0
votes
1answer
35 views

Confusion regarding the definition of inflation premium

'Inflation premium' is defined here as the higher return that investors demand in exchange for investing in a long-term security, where inflation has a greater potential to reduce the real return. In ...
2
votes
0answers
7 views

National Production/Consumption Data

I've found https://comtrade.un.org/ for country-to-country product import/export data. Is there an equivalent data set for self-consumption, ideally harmonized with the UN's H6 classification system? ...
4
votes
1answer
85 views

Cheap talk with mechanics

Sorry in advance for asking too many questions. I am just seeking for some minor help and check if what I'm thinking is acceptable. A customer R takes his car to the mechanic S. The mechanic can ...
1
vote
3answers
34 views

Relationship between taxation, national debt, and pool of private investment money

We've all heard the argument that an increase in taxation of the wealthy, or of investment earnings in particular (capital gains + dividends) will discourage investment and hurt the overall economy. ...
0
votes
0answers
60 views

Calculate Marshallian demand from a utility function [closed]

I can't seem to understand where I should start with. I think these problems can be solved using Lagrange but I know nothing more. $U(x_1, x_2, x_3) = x_1 · x_2 · x_3 $ Is there any procedure that I ...
2
votes
1answer
22 views

Equilibrium in strategic game with complete information

Consider the following strategic game with complete information. Set of players is $N = \{1, . . . , n\}$, where $n ≥ 2$. Each player $i ∈ N$ chooses action $a$ $i ∈ \{0, 1\}$. Payoff of each $i ∈ N$ ...
0
votes
1answer
32 views

Is there any reason to test Difference-in-Differences if paralell trend is weakly violated?

Normally when testing the parallel trend assumption in the Difference-in-Differences setting, we normally conduct the joint null test for the coefficients of pre-treatment periods. Normally, while the ...
0
votes
0answers
11 views

Can current value of left hand side of a simultaneous equation be an instrument?

Inflation and output gap are endogenous variables in this regression. Can $r_t$ be an instrument? I know the lags can, but it is the first time I am seeing the current value of the left-hand side ...
6
votes
1answer
52 views

Proove that for every Nash equilibrium $\sigma^*$, the probability distribution $p_{\sigma^*}$ is a correlated equilibrium

This is a classic theorem in game theory, that is left as an excersice in my textbook. Can anybody proove it? I can not thing of anything excpet from the definition of the correlated equilibrium in ...
0
votes
2answers
42 views

Real interest rate confusing definition

I'm currently reading "Financial Markets and Institutions" by Cornett and Saunders. On the section on interest rates, the real interest rate is defined as: A real interest rate is the ...
3
votes
3answers
64 views

the relationship between the growth rate of GDP, GDP per capita and the population

I was reading Capital in the Twenty-First Century by Thomas Piketty and it says the growth rate of GDP is equal to the growth rate of GDP per capita plus the growth rate of the population, and I ...
0
votes
0answers
8 views

How to test parameter restriction in seemingly unrelated regression using STATA?

Given constrain 1: [w1]ln_p2 = [w2]ln_p1 I estimate an Ideal Demand System using surge command in STATA w1 = a1 + g11 (ln_p1) + g12 (ln_p2) + b1(real_income) w2 = a2 + g21 (ln_p1) + g22 (ln_p2) + b2(...
0
votes
1answer
37 views

When should we exclude an independent variable out of the regression?

In my case, I have two questions that I want to ask here relating to correlations among variables: Whether it makes sense if we test the impact of laws on two outcome variables that are correlated to ...
1
vote
0answers
27 views

What is a rest-function in a Solow model?

I am trying to better understand the Solow-Swan growth model and the golden saving rate. When searching around I came across a blog explaining the intuition differently. Instead of in the standard ...
2
votes
1answer
41 views

Competitive equilibrium in signaling games

Consider two firms are offering contracts to an employee who has either high or low productivity ($θ_H$ or $θ_L$, with $θ_H > θ_L$). The employee can acquire education $e$ which is costly but does ...
0
votes
0answers
32 views

Calculating demand function with MRS

$u(x_1,x_2)=x_1(x_2)^2$ I want to calculate the demand function $x_1(m,p_1,p_2)$ and $x_2(m,p_1,p_2)$. $MRS(x_1,x_2)=-\frac{x_2}{2x_1}$, from $\frac{x_2}{2x_1}=\frac{p_1}{p_2}$ we get $x_1=\frac{...
0
votes
0answers
15 views

Cyclicality of Inflation and Price Level

Why is price level in general considered to be countercyclical while inflation is generally considered to be procyclical? Thank you!
2
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0answers
11 views

What were the historical theories of price formation before demand-supply relationship was well understood?

Markets have existed for thousands of years. People must had ideas about where prices came from. Before the clear formulation of demand/supply-based theory of prices, what were the historical theories ...

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