# All Questions

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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(...
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”, ...
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?
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### 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 ...
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### 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 ...
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 ...
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 ...
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 ...
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., ...
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 $S$ ...
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 ...
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 ...
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?
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, ...
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 ...
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 ...
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 (...
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.
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### 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 ...
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?
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 ...
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 !
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 ...
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 ...
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### 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 ...