# All Questions

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### 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 ...
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 ...
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 ...
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,...
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 ...
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 ...
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 ...
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. ...
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 ...
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.
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 ...
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), ...
119 views

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 ...
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 ...
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 ...
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?
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. ...
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....
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 ...
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 ...
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 ...
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 ...
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 ...
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, ...
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 ...
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!
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 ...
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 ...
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 ...
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 ...
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 ...
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? ...
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 ...
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. ...
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 ...
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 $i ∈ N$ ...
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 ...
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 ...
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 ...
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 ...
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 ...
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(...
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 ...
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 ...
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 ...
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{...