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1answer
73 views

Why can per share earnings growth only keep up with GDP growth, if no new shares are issued?

I transcribe Ben Felix's speech (BSc Mechanical Engineering (Northeastern University), MBA Finance (Carleton University), CFA, CFP, CIM) starting from 8:33. I just screen shot his animation, rather ...
4
votes
2answers
49 views

“If markets are competitive, the rate of return on capital equals its marginal product, $f'(k)$ minus depreciation $\delta$”?

Consider Solow model with $Y=(AL)^{1-a}K^a$. Then output per effective labor is $y=k^a$ where $k=\frac{K}{AL}$. "If markets are competitive, the rate of return on capital equals its marginal product,...
2
votes
3answers
38 views

When the federal reserve buys bonds or other assets from banks, do the banks make a profit?

My understanding is that the federal reserve is injecting money in the market by buying bonds and debt from banks. Do the banks make a profit on the sale of their bonds or corporate debt to the feds?...
2
votes
1answer
32 views

Can a rescue package be considered as a subsidy to the industry?

In the BBC article, France announces €8bn rescue plan for car industry, it is mentioned that the car industry will be given a rescue package to avoid unemployment. Would this be considered as a ...
2
votes
1answer
38 views

What is the difference between the demand schedule and the demand curve?

What is the difference between the demand schedule and the demand curve that a monopolist or monopsonist has? Could someone provide details for both cases or even some paradigm or a graph. I can not ...
1
vote
0answers
19 views

Somers’D and Gini coefficient: differences

I would like to know what are the differences between somers’d value and the Gini coefficient. I have the following values for factors: ...
0
votes
0answers
12 views

how to adjust price data due to clock changes?

I'm trying to analyze the hourly price variation of the electricity market. However, because of clock changes, due to daylight saving time, we have a missing hour in March and an additional hour in ...
0
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0answers
8 views

Entropy Balancing or Propensity Score matching in an Experiment (that needed Intention to Treatment instrumental variable IV approach)

I did an experiment with random assignment to two treatment groups and one control group. I had problems to encourage participation in one treatment (treatment 1), so at the end, I had to randomly ...
2
votes
1answer
32 views

Estimation of point-identified Dynamic Discrete Choice models with moment inequalities

I'm trying to understand and implement in code the method in Bajari, Benkard, Levin (2007). The first stage is clear to me, as well as how to forward-simulate to obtain an estimate of the value ...
0
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0answers
14 views

Relative demand curve in Ricardian models

In many expositions of the Ricardian model, a relative demand curve is used. For example, consider the figure here: https://en.wikipedia.org/wiki/Comparative_advantage#/media/File:...
0
votes
1answer
26 views

Does the duality of utility maximization and cost minimization hold in practice?

I recently learned about the relationship between utilization maximization and cost minimization. Are there studies on whether this duality holds in real life? Any information on this topic for a ...
4
votes
2answers
77 views

NE equilibrium with lobbying of cournot producers

I have had an exam (exam is now past and submitted, but I want to now understand the solution without waiting) with the following questions: GAME Consider two firms playing the following two-stage ...
0
votes
1answer
40 views

How does the stock market correlate with the economy?

What's the Correlation Coefficient between the Canadian and US stock and economy? Don't hesitate to discuss other stock exchanges. On Apr 30 2020, Paul Krugman wrote Opinion | Crashing Economy, ...
1
vote
1answer
54 views

Tadelis ‘trading places’ Bayesian game

My question concerns the following problem: two players, $1$ and $2$, each owns a house. Each player $i$ values his own house at $v_{i}$. The value of player $i$'s house to the other player, i.e. to ...
1
vote
1answer
36 views

What was Paulus's “famous definition of price”?

Schumpeter (1912 [1954]) mentions the famous definition of price by Paulus. What does this refer to?
1
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2answers
51 views

Is there any fundamental reason that output elasticity of capital $<1$ in general?

In Solow growth model, if one perturb the saving, there is convergence of old equilibrium capital to new equilibrium capital as investment breaking point capital is attractor. However, in derivation ...
5
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2answers
425 views

What books to read to learn about geography and how it affects economic development?

I saw youtube videos like how geography doomed Africa and heard how Japan's prosperity is an anomaly due to its isolation and they got me interested.
0
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0answers
53 views

Sraffa's Model of Price Determination in a Subsistence, Circulating Capital Economy

This question is prompted by reflection on the opening of Sraffa (1960), pp 3-4 in the Indian edition linked here. Sraffa presents a simple model of a subsistence, circulating capital economy (an ...
2
votes
1answer
36 views

Are the EU funds coming from EU citizen's taxes as well?

I was trying to understand how the EU is funded using their official website, but my limited understanding of economy makes it very hard to understand the money pathways from a single unit (the ...
0
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0answers
21 views

How can increasing debt boost potential returns?

May 26 2020. Why Even Carl Icahn Couldn't Save Hertz From Chapter 11 - Bloomberg Hertz’s debt binge began when it was acquired by private equity firms from Ford Motor Co. in 2005; the new owners ...
0
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0answers
6 views

How collateral easing measures complement PELTROs or TLTROs?

ECB introduced Collateral easing measures on 8th April to complement its already existing refinancing operations. Do banks have to keep some collateral with ECB while borrowing? This is when they are ...
1
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0answers
40 views

What is the best measure for the world's economic cycle?

I'm trying to make a graph that shows how the return of major assets (S&P 500 index, % of 3Y T-notes, oil, gold, etc) move along with the world's expansion& recession cycle. I looked into ...
0
votes
1answer
43 views

Revenues and cost functions

Let's assume that there is a firm that produces a single good, $q=f(x)$, where $x$ is a single input. The firm can sell it on the market at a price $p$. It's production cost is given by a cost ...
2
votes
2answers
75 views

How can a sovereign debt ratio be high, but debt-servicing ratio be low?

I'm quoting this May 22 2020 interview with NYU Stern Prof. Nouriel Roubini. In other words, you’re saying that because of structural weaknesses in the economy, even modest inflation would be crisis-...
2
votes
1answer
52 views

How do debt-free governments control the money supply?

From what I read in my introductory macroeconomics textbook, central banks can control the money supply by selling government bonds in the market (decreases money supply), or by buying government ...
4
votes
0answers
25 views

Effects of wartime rationing on British life expectancy?

From The Economist (23 May 2020): In Britain during the 1940s life expectancy shot up by seven years, thanks to a wartime rationing system that ensured everyone had nourishing (if dull) food. I ...
0
votes
1answer
16 views

House allocation: Data notation correction with Top Trading Cycles (TTC) example

I am trying to understand TTC algorithm for house allocation. I have got a small problem. I am trying to understand the following example: IE=[i1 , i2 , i3 , i4], IN=[i5], Ho=[h1 , h2 , h3 , h4], ...
0
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0answers
22 views

In Solow growth model, increasing consumption drops production which should measure GDP?

Consider Solow growth model $Y=F(K,AL)$ where $A$ measures knowledge progress, $K$ is capital and $L$ is label. I have suppressed temporal dependence. I am going to assume $L$, $A$ grow exponentially ...
5
votes
0answers
43 views

Has it truly been established that the restaurant industry operates on thin margins?

For as long as I can remember I've constantly seen the truism that restaurants operate on "razor sharp margins" repeated endlessly by the media, the restaurant industry, and the average joe. This ...
-3
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1answer
66 views

Differentiability of the utility function and indifference curves

Comment on the following affirmative: In the traditional consumer model, the hypothesis of differentiability of the utility function and of convexity of preferences, assure the indifference curves ...
3
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1answer
33 views

What does Adam Smith mean when he says wages are determined by: “advancing, stationary, or declining state of the society.”

I'm reading the Wealth of Nations. Smith explains in Book One that wages for labor are determined not by how wealthy a nation is but rather by its rate of growth. At the end of chapter seven he ...
8
votes
2answers
2k views

R or Python for private sector economist/strategist

Quick question (but complex answer) : R or Python ? I work as an economist/Strategist in the finance industry. As I do a lot of presentations, notes-writing, data searching, my programming time is ...
0
votes
0answers
19 views

What is the meaning of M2/Base (Monetary base) in money supply?

I plotted the change of M2, Base supplies ($MM) obtained from the below websites: https://fred.stlouisfed.org/series/M2 and https://fred.stlouisfed.org/series/base I interpreted the M2/base ratio as ...
0
votes
2answers
136 views

How can we get negative **real** interest rate?

According to Fisher's equation, Real interest rate=Nominal interest rate - expected inflation rate So, how can we get negative real interest rate? I'm in doubts. On one hand, purely from algebraic ...
1
vote
0answers
30 views

Opportunity cost of goods provided free of cost

If the government of a country decides to provide certain good free of cost to its citizens, what can one say about the opportunity cost? Government is certainly using the revenues raised from the ...
6
votes
3answers
447 views

What is the opportunity cost of doing something in your spare time?

My university is using this textbook. The text clearly states, “Economists use the term opportunity cost to indicate what must be given up to obtain something that is desired.” This leads me to ...
2
votes
1answer
36 views

Multiplier effect and GDP

The fundamental national income accounting identity is: $Y = C + I + G + X - M$. The multiplier effect tells us that an autonomous injection into the economy will result in a multiplied increase in ...
1
vote
1answer
23 views

How does the Monetary base, Narrow money and Broad money affect inflation?

In a lot of countries (e.g. Hungary) the M0, M1, M2 and M3 all doubled, tripled or even quadrupled in the past 10 years. How does this directly affect inflation? Since just because M2 doubles, it ...
0
votes
2answers
92 views

Bananas and oranges in communist countries

This is a question I wanted to ask for a long time. If you check the GDP or East Germany in 1989 and compare it to that of banana-producing countries you can see: ...
11
votes
3answers
904 views

What is the point of all the models in an economics degree?

I am a student of Economics doing my masters degree and I have to say I am a bit tired of all the models. On the one side, there is these models where I can see how they are derived, which always ...
1
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0answers
27 views

Solow model: effect on a sudden fall in population? [closed]

my question is, what happens in the Solow model when a sudden fall in population happens? let's say a bomb killed many people.
1
vote
1answer
32 views

Whether a good is a Giffen good should be based on circumstance?

The textbook example of a Giffen good is the potato during the Irish Potato Famine. It is characterised by a positive income effect that is larger than the negative substitution effect when the price ...
2
votes
1answer
42 views

Why does the answer not include increased negative unplanned stock investment?

I will focus on the event "c": The answer for "c" is following: A sharp increase in the rate of real GDP growth leads to a higher level of planned investment spending by producers, according to ...
1
vote
1answer
79 views

Mathematics of the income and substitution effects

I have recently been learning about the concept of utility and the indifference curve. I am having some problems understanding the effects on consumption of two goods $X$ and $Y$ of a change in the ...
0
votes
0answers
34 views

Characteristics of market liquidity

The characteristics of market liquidity, accoridng to Kyle, are tightness of the market, depth of the marekt and resiliency of prices. By referring to tightness, it descriebes the cost of turning ...
5
votes
1answer
50 views

What does it mean by saying someone is “effectively risk averse/loving”?

Recently I am reading a paper by Ortner & Chassang (2018) on corruption control. It is a nice paper to read, and the idea is kinda cool. The game is as follows. There are 3 players, a principle, ...
3
votes
1answer
69 views

Theory of and studies on the long-term effect of governmental redistribution

Proposition 28 from this 2000 survey (Fuller and Geide-stevenson 2010) of American economists shows that 49% of American Economics Association members agree, and 31% agree with provisions, that it is ...
0
votes
1answer
37 views

How central banks “create” negative interest rates?

How can the Fed push Fed Funds rate to negative? I think I understand how it works with >= 0 -- they just lend reserves for bonds until they hit their targets, but what about <0? Has this something ...
2
votes
0answers
17 views

Are heterogenous expectations models still determinate, closed models?

Cars Hommes proposed many models based on agents having heterogeneous expectations. Agents switch between a fixed set of prediction rules depending on their forecast error history. However, it seems ...
5
votes
1answer
52 views

What does it mean if a economic model is internally consistent?

What does it mean if a economic model is internally consistent? What happens if it is not? Is it not closed anymore? Can it still be solved? Does it still have an equilibrium?

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