All Questions

Filter by
Sorted by
Tagged with
0
votes
0answers
13 views

ARDL and ECM lags

What number of lags should I take in ECM model from ARDL specification? Assume I have equation y=x+z+r+h and ARDL(3,2,1,0). Should I specify ECM model as this d(Y)=d(Y,1) + d(Y,2) + d(X,1) + d(R) + d(...
3
votes
3answers
80 views

Arrow’s Impossibility & Validity of Social Welfare and Pareto Improvement Analysis

Arrow’s Impossibility states it is impossible to formulate a social ordering (Social Welfare Function) without violating some desirable conditions ( one of the “No dictatorship”, “ Pareto Efficiency”, ...
-2
votes
0answers
27 views

How many people in the USA work for Chinese companies?

How many people in the USA work for Chinese companies or for joint ventures majority-owned by Chinese companies?
3
votes
1answer
59 views

How can a government save, if it has deficit?

I am reading an IMF paper about China's debt (link) which says: ❝ Despite a large augmented fiscal deficit of 10 percent, fiscal savings remain higher than other countries, resulting from the biased ...
0
votes
0answers
16 views

How would consolidation in the brokerage space make things better for banks?

There is a bit from an article I don't quite understand: China has been eager to whip its brokers into shape. Officials want capital markets to lessen the burden on banks, which last year provided ...
2
votes
0answers
17 views

GDP accounting: Insurance spending belong to which part of GDP?

We know that $GDP = C + I + G + NX$, where $C$ is household consumption and $I$ is private investment. I don't know whether insurance spending (e.g life insurance) belongs to $C$ or $I$. I've googled ...
1
vote
1answer
44 views

What's the economic argument (if any) for taxing dividends as ordinary income?

My (limited) understanding is that dividends and share repurchases are economically very similar: while share repurchases are slightly less direct, both transactions are effectively ways for publicly ...
0
votes
1answer
106 views

Why are Americans at the top of nearly every field?

I live in India, and having spent several years in America before returning, I noticed that Americans dominate in nearly every sphere of human activity. For example, the US seems to be blessed with ...
2
votes
1answer
25 views

Monetary policy rate and fiscal deficit

A colleague in work mentioned today that Chile is keeping a flat monetary policy rate given "there is a higher expected fiscal deficit". If there is an expected fiscal deficit (i.e., ...
0
votes
0answers
22 views

Estimating multi-output production technologies

For a given firm, is it ever appropriate to estimate an independent production function for each output? For example, a university produces journal articles $A$ and services a number of students $S$ ...
0
votes
0answers
46 views

Policy ineffectiveness proposition

Suppose, the Aggregate supply is given by the Lucas Supply Curve - $y_t = ȳ + b(P_t - E_{t-1}P_t) + μ_t$ where $μ_t$ is stochastic supply shock (following standard normal error properties). Aggregate ...
4
votes
2answers
82 views

What are the correct utility functions?

It is common to talk about utility functions. For example in a universe with only two goods, we might assume each person (or group of people) carries a function $u(x,y)$ in their heads. When offered ...
1
vote
1answer
23 views

Are business cycle fluctuations usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?

I wonder if business cycle fluctuations are usually studied in a (New Keynesian) DSGE model, or can they also be studied in a growth model?
1
vote
1answer
41 views

Is Adam Smith's “stock” an archaic version of “capital”?

In The Wealth of Nations, Adam Smith uses the word "stock" many times, but not with the meaning we ascribe to it today (supply of an asset, inventory). I take it that he refers to capital, ...
1
vote
0answers
17 views

Solving a HJB with additional constraints on control and state variables

I am trying to solve a Hamiltonian-Jacobi-Bellman equation with additional constraints on the state and control variables, but I am a bit confused on how to do that. In Intrilligator 2002, it is ...
30
votes
4answers
9k views

Are there historical cases of country A printing the currency of country B for the main purpose of economic warfare?

I recently read in a news article that a large amount of Libyan banknotes printed in Russia were seized in Malta following an order coming from the USA. Both Russia and the USA have geostrategic ...
2
votes
1answer
34 views

How can non-US banks issue USD loans?

I understand, commercial banks are entitled by the Central Bank to "create new money" when they issue a loan and correspondingly "destroy the money" when the loan is paid back (...
0
votes
1answer
18 views

Can an Out the Money put option's price $>$ its Strike Price?

I'd guess yes, if the put option's IV spikes. An OTM put has merely Time Value and no Intrinsic Value.
0
votes
1answer
22 views

Are taxes,subsidies and social money transfers(i.e. welfare) accounted in money velocity?

As far as I know, money velocity is an average amount of times a typical, say, dollar, gets spent on goods during 1 year. So if it's spend N times to pay for goods, then money velocity equals N. But I ...
1
vote
1answer
31 views

Can an In the Money Put Option's price $>$ its Strike Price?

The screenshot below suggests thatan ITM put option's price can't overstep its strike price? Why or why not?
0
votes
0answers
29 views

Find out inverse demand curve in Cournot competition

I am currently struggling with an exercise and I hope you can help me. These are the basic information: The inverse demand curve is P=a-bQ, while there are four firms competing (Cournot) in this ...
2
votes
2answers
31 views

What are the determinants of the natural rate of interest and how market rate converges to it?

I'd like to know how is determined the natural/neutral rate of interest. Moreover, how the market rate can converge to it ? If you have some references it would be great !
0
votes
0answers
34 views

How could Euro bonds serve as a “safe haven” asset in the long run?

The German Bund has been the major safe-haven asset in the Eurozone despite the advent of the Euro. However, I noticed that there is mounting anticipation around a potential 750 billion worth of Euro ...
0
votes
0answers
54 views

How do I figure out whether the ICs are convex or concave?

Question: Randy Ratpack hates studying both economics and history. The more time he spends studying either subject, the less happy he is. But Randy has strictly convex preferences. (a) Sketch an ...
0
votes
0answers
8 views

Effect of a productivity shock on the real exchange rate within a two period model

So if we have a two period model, tradable goods and nontradable goods, where consumers tend to maximize utility, then we have the following Euler equation: $$\frac{ u' (c_1) }{P_1} = (1+r)\beta \frac{...
0
votes
0answers
12 views

What is steady state learning in the context of boundedly rational expectation modeling and how does it differ with other theories of learning?

What is steady state learning in the context of boundedly rational expectation modeling? E.g. see Evans et al. (2009) They define it as: "Under steady-state learning, agents use past data to ...
2
votes
2answers
65 views

Are quantitative easing and helicopter cash really different tactics? And how does QE relate to Modern Monetary Theory?

I've been trying to get a clear understanding of exactly what economists mean by Quantitative Easing (QE). It seems to me that different people mean different things by it. I find simplistic analogies ...
0
votes
1answer
28 views

Bargaining Theory: reading list

I looked around in the forum but I have not found this question yet. I would like to approach the topic of bargaining models in the spirit of Rubinstein, Ariel. "Perfect equilibrium in a ...
1
vote
0answers
39 views

Log-linearization of an intertemporal budget constraint

I'm trying to recreate the paper "Learning about Monetary Policy Rules when Long-Horizon Expectations Matter" by Preston. At one point he says that he log linearizes the intertemporal budget ...
-1
votes
2answers
31 views

Bondholder vs purchaser of bond

Kindly clarify if the term bondholder refers to the bond issuing authority or the person who purchases the bond. Context: if there's inflation in the economy, bondholder will lose and the person who ...
0
votes
0answers
13 views

Do there exist macro (policy) models that adopt non-rational choice quantity decision making with boundedly rational expectations?

Do there exist macro (policy) models that adopt learning-to-optimize decision mechanics instead of rational optimisation? I guess hand to mouth consumers are an example. There are many New Keynesian ...
-3
votes
0answers
67 views

How can retail investors who started investing only after March 23 2020, afford to invest?

I read this Money SE answer that cites No, The Market Is Not Rallying Because Of Robinhood Traders, Barclays Says Key background A wave of new retail investors piled into zero-cost brokers like ...
1
vote
0answers
17 views

Modelling the effect of crisis on unemployment

We want to estimate the effect of crises on a country's unemployment rate and distinguish the strength of this effect according to the debt level in a country (i.e. via the interaction effect crisis x ...
0
votes
0answers
23 views

If a stock split 1:3, why would its price drop from 405.8 to 4.86? [closed]

XpresSpa Announces 1-for-3 Reverse Stock Split Nasdaq:XSPA The reverse stock split is scheduled to take effect after the market closes on June 10, 2020 (the "Effective Time"). Shares of the ...
0
votes
0answers
21 views

Does the stock market usually overshoot both ways?

I've loosened Lee Spelman's contention from "always" to "usually". I pasted her biography to prove she appears qualified. Lee Spelman, managing director, is the Head of U.S. ...
0
votes
1answer
17 views

What does Mohamed El-Erian mean by “recovery value of assets”?

Pls see the emboldened phrase. Investors must prepare portfolios for Covid-19 debt crunch | Financial Times The financial stress caused by Covid-19 is far from over. Investors should brace for non-...
1
vote
4answers
89 views

Doubt about Mixed Strategy Nash Equilibrium

Here's the video I will be referring too. Now I am a complete beginner in game theory, so sorry if this sounds like a stupid question, but why would a player want to balance out the payoffs of another ...
0
votes
0answers
12 views

Numerical Backward Induction Optimal portfolio choice

I am currently considering a simple life-cycle problem. We consider a market with equity risk only, which follows a geometric Brownian motion. We seek to maximize the terminal wealth of a CRRA utility ...
2
votes
1answer
24 views

Deflate level and flow variables using PPI and CPI

What do statements like Flow variables (such as dividend growth and returns) are deflated using the CPI index. or Level variables are deflated using the Producer Price Index (PPI). mean? What are ...
2
votes
1answer
27 views

What is the meaning of “labor input” in the context of incentive theories?

In the article "Multitask Principal-Agent Analyses: Incentive Contracts, Asset Ownership, and Job Design" (Holmström and Milgrom, 1991) it is said that two identical agents ($i=1,2$) devote ...
1
vote
1answer
45 views

How to interpret this regression coefficient?

I am performing a simple single variate regression on the variables crime rate (denoted by crrate) and the probability of getting arrested (denoted by prarrest). To be precise, the variables are ...
3
votes
1answer
31 views

Blackwell order of information structures

Consider a model where a decision maker (DM) has to choose action $y\in \mathcal{Y}$ possibly without being fully aware of the state of the world. The state of the world has support $\mathcal{V}$. ...
1
vote
0answers
49 views

Does the Efficient Market Hypothesis explain why Cheaspeake Energy skyrocketed from \$25.95 to \$77.5 before tumbling to \$21 over 3 days?

In this question's title, I reported the daily highs for CHK for June 5th 2020 ($25.95), 8th, and 9th. CHK had been rumoured to file for Ch 11 bankruptcy since March 2020(?), and it did on June 28. ...
1
vote
0answers
14 views

What quasi-experimental/econometric technique can I use to measure the impact of a policy using longtitudinal tax data?

I have two cohorts of workers with very similar characteristics (e.g. same demographic profile, skill level, industry) that were laid off at different points in time. Say one group was laid off ...
1
vote
0answers
31 views

How many cars are made in China by Chinese brands?

From the 25+ million cars made annually in China, many of them are German, American or Japanese brands. How many of the cars made inside China are actually Chinese brands?
3
votes
0answers
36 views

Proof of excess community demand function in Sonnenschein (1973)

Consider the following passage in Sonnenschein (1973; full citation below): Perhaps because I do not know much about the uniform Lipschitz condition, I do not follow his exposition after the first ...
1
vote
0answers
51 views

Prove local non satiation and convexity? [closed]

If we have the following representation of a preference relation (in form of a utility function) $$u(x_1, x_2) = \max\{2x_1, 2x_2\} + \min\{x_1, x_2\}$$ does the relation satisfy local non satiation ...
-1
votes
0answers
63 views

What did Krugman mean by “cult of amauterism” when describing why Britain fell behind in economic growth race?

From Krugman's macroeconomic textbook: It’s one of the classic questions in economic history: Why did Britain, the home of the Industrial Revolution, by far the world’s leading economy for much of ...
1
vote
1answer
32 views

Is Currency Devaluation a cause or effect of interest rates?

I understand that Federal bank/Goverment can manipulate the currency market and devalue its currency by printing more money or buying foreign currencies/assets (essentially increasing the supply of ...
6
votes
1answer
85 views

Are no arbitrage models and equilibrium models equivalent?

This YouTube video from WHU (starting from 3:50) claims that no-arbitrage models (such as Black-Scholes and HJM) are equivalent to equilibrium models (such as CAPM or C-CAPM). He uses the Euler ...

15 30 50 per page