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0answers
18 views

Meaning of PPP conversion factors

How do I interpret the numbers of this table PPP conversion factor, GDP (LCU per international $) as published by the World Bank: First of all, it's just numbers, but what do they tell (in common ...
1
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0answers
14 views

Market structure determination

I will be conducting a research about the market structure of an outdoor farmers market. I wanted to know what kind of survey questions could help me for example to determine the PES of the market or ...
1
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3answers
99 views

Why would microeconomics be considered more “objective” than macroeconomics?

I can imagine the following reasons for this: conflation of positive vs normative economics in macro micro phenomenon is less complex (or smaller): thus easier to create reliable models for Thanks
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0answers
24 views

“Supply creates its own demand. Only by consistently supplying it can we hope to increase the demand for the substantive over the superficial”

Keynes has disapproved the say's law "supply creates its own demand" but I want to know if there is any empirical evidence that this law doesn't hold true? Theoretically, keynes successfully ...
0
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1answer
45 views

How to prove that a concave production imply that the input requirement sets are convex?

According to page 7 of this slide, "A convex production set Y implies that the associated input requirement set V(y) is convex". How can one go about proving it?
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2answers
152 views

Corner solution of the maximization problem

Answer Hello, I upload the actual question with my 8-pages answer. Please can you check it. Is there a corner dissolution for $c=\gamma$. Please share your ideas. Thanks.
7
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1answer
113 views

Are there any other rational preference relations without utility function representations, besides Lexicographic?

It seems like lexicographic isn't that "special". Like yes it is special in that supposing it has a utility function gives you a bijection from the rationals to the reals, but I mean unique in some ...
1
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1answer
38 views

Is conditional mean independence, $E(e_i | x_i)=0$, a different assumption from $E(x e) = 0$? (from Hansen)

This question comes out of Hansen's Econometrics ((https://www.ssc.wisc.edu/~bhansen/econometrics/Econometrics.pdf)) In section 2.18, we only impose the assumptions of finite variance and $Q_{xx}$ ...
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0answers
37 views

Purchasing Power Parity and Baskets of Goods

On the exact definition and understanding of "purchasing power parity" it depends what it means when the World Bank defines the “extremely poor” people of the world as those who are currently ...
0
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0answers
16 views

Why was reform of Chinese State owned enterprises needed? [closed]

Why was reform of Chinese SOE needed in the mid-1990s? And how did the government go about implementing these reforms? I've read a bunch of texts on this stuff, but a high-level explanation would put ...
1
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1answer
40 views

Banks providing loans

Banks are providing loans. While granting a loan two scenarios can take place The Loan is repaid The Loan is not-repaid The benefit from a re-payed loan is small profit. (Let's say 5% in general) ...
0
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1answer
20 views

How does protectionism harm the producers and workers in export sectors in the country implementing the protectionist policies?

According to Protectionism (Protectionism) also reduce trade and adversely affect consumers in general (by raising the cost of imported goods), and harm the producers and workers in export ...
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0answers
16 views

calculate magnitude of a recession

I'm doing an exercise from Blanchard Macroeconomics where I'm, apart from other things, asked to calculate the severity of recessions in the US since 1960. The data on the webpage that's referenced is ...
0
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1answer
33 views

Relationship between expected utility and independence axiom

Jonathan Levin in "Choice under Uncertainty" wrote in Theorem 1 " A complete and transitive preference relation on a set of lotteries P satisfies continuity and independence if and only if it admits ...
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0answers
25 views

Homothetic preferences linear in income

How to prove that $x(p,I)=I \cdot x(p,1)$? I would favor an argument based on showing that these are the $argmax$ to different problems and they coincide rather than using the fact that the MRS are ...
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0answers
10 views

Where to find series of capital-output ratio for the US?

While the capital-output ratio is widely used in Macroeconomics as a target in calibration, it is usually just set to be equal to 3, without specifying the data source nor the methodology used to ...
-1
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0answers
28 views

How to draw the graph of $ u(x) =min\{x_{1}, x_{2}\}$ and $ u(x) =max\{x_{1}, x_{2}\}$?

Given the utility function $ u(x) =min\{x_{1}, x_{2}\}$, and $ u(x) =max\{x_{1}, x_{2}\}$, I know that the indifference curves look like an L shape and inverted L-shaped, respectively. However, I don'...
0
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1answer
38 views

How to find change in the optimal choice with a utility function in general form?

Suppose the utility function is represented as $U(x_1,x_2;I)$, where $I$ is the level of information the consumer possesses. How to find the change in the optimal choice of $x_1$ as price of $x_1$ ...
0
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1answer
19 views

Are there examples of strategies where a combination of third degree pricing and two-part tariffs are used together?

Of course, I am only interested in instances where the combination of the two strategies ultimately lead to higher profits than if the monopolistic firm had used only one.
0
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1answer
41 views

How to change the observation for the first lag in an AR(1) model?

I run a simple AR(1) model in my analysis using ols: ar.ols(df$y, order.max = 1)) However, I work with generations as my unit of analysis. Therefore, the first ...
0
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1answer
38 views

Why might a monotone increasing but nonlinear transformation of a utility function not represent the same preferences?

According to a textbook, a monotone increasing but nonlinear transformation of a utility function might not represent the same preferences. Why is it so? An example of such preference would be ...
0
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0answers
17 views

Do any social welfare functionals meet all of Arrow’s conditions, plus absolute-scale full-comparability, but no other informational condition?

I’ve been trying to think of social welfare functionals which meet all of Arrow’s conditions–––unrestricted domain, weak Pareto, independence of irrelevant utilities, and non-dictatorship (see this ...
0
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1answer
35 views

Clarification of iterated prisoners dilemma

In the description of an iterated prisoner's dilemma on Wikipedia, it states that in order for a game to be considered iterable, it must conform to the rule 2R > T + S, where R is the reward for ...
-1
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0answers
22 views

What price elasticity of demand can be inferred from this data?

What price elasticity of demand can be inferred from this data? Here is the corresponding data: https://www.energy.gov/sites/prod/files/2018/04/f50/fotw_1024_web.xlsx It seems to me that the (Gas ...
1
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2answers
243 views

Finding demand functions for an unusual utility function

I have a utility function: $U = x + \min\{x,y\}$ I want to draw the indifference curve and find the demand functions. Will it be the case of the usual perfect complements? Also, what preferences ...
0
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0answers
19 views

Would households rather live in a world with or without the unemployment insurance?

Would households rather live in a world with or without the unemployment insurance? What is a good example of world in which unemployment insurance is seen as a benefit, and not a hindrance?
1
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0answers
75 views

Revenue maximization problem

There are $N>0$ Households in an economy. The government has aim to maximize a weighted average of income by imposing tax on the rich people and redistribute the tax revenue to the labor ones. ...
0
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1answer
52 views

Why is a monotone increasing but nonlinear transformation of a utility function not represent the same preferences if the preference is complete?

According to a textbook, in the context of uncertainty (e.g. in lottery), if the preference is complete, a monotone increasing but nonlinear transformation of a utility function would not represent ...
0
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1answer
24 views

Banks and Stock Market in Germany

My question is: ** Why does Germany have such a small stock market, but very large powerful banks? **
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0answers
18 views

Effect of Agricultural products on GDP/capita

What is the best way to regress this effect. I would like to show the effect of the production of different agricultural products (Rice, maize, wheat etc..) have on the gdp of a country (India in this ...
0
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1answer
37 views

Why income elasticity of demand of luxury good in greater than 1?

According to textbook and wikipedia, "if income elasticity of demand of a commodity is less than 1, it is a necessity good. If the elasticity of demand is greater than 1, it is a luxury good or a ...
2
votes
0answers
25 views

Why would expanding fiat paper issue lead to decreased exports?

I'm reading "A History of Money and Banking in the United States" by Murray Rothbard, and I'm having trouble understanding this one piece of history. Basically, the Massachusetts government issues ...
0
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0answers
22 views

Incomplete markets vs complete markets in permanent income model

Consider the standard permanent income model: $$\max_{\{c_t\}_{t=0}^\infty, \{b_{t+1}\}_{t=0}^\infty} \mathbb{E}_0 \left\{ \sum_{t=0}^\infty \beta^t u(c_t)\right\}$$ s.t. $$c_t + b_t = R^{-1} b_{t+1} +...
2
votes
0answers
27 views

First order condition of the sequence problem

Consider the standard permanent income model: $$\max_{\{c_t\}_{t=0}^\infty, \{b_{t+1}\}_{t=0}^\infty} \mathbb{E}_0 \left\{ \sum_{t=0}^\infty \beta^t u(c_t)\right\}$$ s.t. $$c_t + b_t = R^{-1} b_{t+1} +...
0
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0answers
38 views

How to prove that the walrasian demand function $x(p,w)$ is continuous in $p$ and $w$?

If the utility function $u$ is continuous and satisfies local nonsatiation, and walrasian demand function $x(p, w)$ is a function (i.e. always map to only single values), how to prove that $x(p,w)$ is ...
1
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0answers
28 views

The centralized shift from barter to currency economy

Suppose some ancient king of small bronze age city-state wants to introduce universal currency instead of barter that is currently in overwhelming practice in his kingdom. In order to smooth the shift,...
0
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2answers
66 views

Question on Central bank loss function interpretation

How do you interpret this central bank’s loss function: $$L(\hat x, \pi)=\alpha \hat{x}^2+(\pi-\pi^T)^2$$ where $\alpha >0$ and $\hat x$ is output gap. Phillips curve is $\pi = \theta \hat{x}+\...
0
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0answers
9 views

Overlapping Generations Model Pension System Question

Part 1 Pension System OLG Model with pension system: Each individual lives up to two periods. The surviving probability at period 2 is p. At period 1, the young household consumes c1, saves s1, and ...
2
votes
1answer
29 views

Why does strictly Walrasian demand with quasi-concave utility function mean that the walrasian demand having only one single consumption bundle?

In the context of Walrasian demand: Suppose u is continuous, satisfies local nonsatiation, and is strictly quasi-concave, each $w(p, x)$ contains a single consumption bundle. The proof I got from a ...
0
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0answers
11 views

Economic Regulation using Price caps

Based on my understanding both the equations are price caps, for firm A real decrease must be 8% and for B real increase must be 1%. But I don't understand how will I choose between the 2 as an ...
0
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0answers
31 views

Interpretation of coefficients in ECM for consumption

Say that we are regressing consumption $C_t$ on time $Y_t$. Furthermore, suppose that both series are $I(1)$ and are co-integrated. Given this, we set up the error correction model (ECM) as follows: $...
0
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0answers
15 views

Kreps Porteus Certainty Equivalent Intuition

In Epstein-Zin recursive preferences, the Kreps-Porteus certainty equivalent is defined by \begin{equation} \mathcal{R}_t(V_{t+1}) = (\mathbb{E}_t V_{t+1}^{1 - \gamma})^{1 /(1 - \gamma)}. \end{...
0
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2answers
38 views

Perfect multicollinearity when estimating a gravity model

everyone! I am estimating a gravity model in order to analyze the impacts of tighter environmental regulations on international trade. More specifically, I am analyzing Brazil's trade flow. My (...
0
votes
1answer
53 views

Check if a utility function represents a monotone preference

Given a function $u(x_1, x_2) = x_1 +x_2 + \min(2x_1, x_2)$, how do we mathematically prove that it monotonic or not? Is there is a general algebraic technique to show monotonicity of suchlike ...
0
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0answers
13 views

Measuring economic growth in GDP (in USD) vs Real GDP (domestic currency)

I've noticed that a lot of data online seems to measure a non-US country in USD. This seems odd to me, because doesn't that mean that US fiscal/monetary policies, politics, and economics would affect ...
0
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0answers
15 views

Numerical Solution Using Excel about optimal consumption of households

I'm not sure how to solve this problem. I'm given the discount factor, interest rate, probability of high income shock, and various income shock sizes that I need to use to compute optimal consumption....
1
vote
1answer
46 views

What idea was proposed to remove global poverty?

I am not an economics student, but I would like to know about this simply but in details. I would like to understand this Noble Prize winning thoery by Abhijit Banerjee , Esther Duflo and Michael ...
0
votes
1answer
25 views

Deriving demand function in case of multivariable utility functions with min and max structures

Suppose I have utility function like this: $u(x_1,x_2,x_3)=min\{x_1,a-x_1\}\times min\{x_2,b-x_2\}+x_3$ where a and b are real numbers and $x_1\in [0, a]$ and $x_2\in [0,b]$. What will be a procedure ...
0
votes
2answers
110 views

Algebraic approach towards convexity

I have a function: $ u(x) = x_{1} + x_{2} + \min\{x_{1}, x_{2}\}$. How do we algebraically show if it's convex or not? Also, what would be the general way to show if any given function is convex.
0
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1answer
71 views

Central bank loss function (I did a solution, but it doesn’t totally make sense I guess)

I have question on central bank loss function. We know that the central bank loss function is $$L(\pi, \bar{Y})= (\pi- \pi^e)^2+\beta \bar {Y}^2$$ And we know that fisher equation is $$i=r+\pi^e$$...

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