# All Questions

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### Alice consumes two goods, almond milk and granola. Let xm and xg be monthly consumption of milk and granola respectively

Alice consumes two goods, almond milk and granola. Let xm and xg be monthly consumption of milk and granola respectively, while pm and pg be the corresponding prices. Suppose that a granola vendor ...
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### Cost Minimization of $f(x) = min(x_1,x_2) + x_3$

The following production function is given, $f(X) = min\{x_1,x_2\} + x_3$ There is a solution here https://math.stackexchange.com/questions/605925/constrained-maximization-of-leontif-utility-function-...
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### Why do we need at least as many instrumental variables as endogenous regressors to identify parameters in 2SLS?

As the title says. Why do we need at least as many instrumental variables as endogenous regressors to identify parameters?
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### Does the Fed/SEC have tools to address shock-propagation from correlation of fund flows?

Premise In 2017, passively invested assets totaled 37% of mutual funds and ETFs; by 2021 this number is closer to 50% if not more. After the market downturn in (March) 2020, the Fed updated their ...
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### Accounting for household work in the GDP

It is often told that domestic work is not included in the GDP estimates due to difficulty in measuring them. I wanted to know if there are any advances in measuring this, or any alternatives that ...
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### Assumptions on preference relation

This question is from Harvard seminar problem set (Q-3 part b) https://www.studocu.com/en-us/document/harvard-university/economics/mandatory-assignments/econ2020a-14-ps01-please-give-as-much-...
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### Credit risk of interest rate on excess reserves vs fed funds rate?

I noticed that the interest rate on excess reserves and the fed funds rate are almost exactly the same at all times. Why is this the case? Shouldn't the credit risk of a bank be higher than the ...
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### Why is the prime rate typically 3% higher than the fed funds rate?

What is the right framework to think about the prime rate in relation to the fed funds rate? Idea 1: A bank is safer to lend to than even trustworthy institutions so there's a premium on prime rates. ...
24 views

### Currency and GDP

USA's GDP (at this time) is ~21 trillion dollards, and UK's is ~2.8 trillion dollars, then how come UK's currency is more than USA's. By that I mean, 1 GBP gets you more than 1 USD.
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### Graphics card shortage - why don't they just raise prices?

See e.g. Nvidia CEO: GeForce RTX 3080 and 3090 Shortages To Last Until 2021 (Tom's Hardware, 2020-10-05) The great graphics card shortage of 2020 (and 2021) (BBC, 2021-01-24) Why don't Nvidia and ...
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### max{x1,x2} where P1not=p2

I have seen min{x1,x2} functions representing perfect compliments but have never seen a max{x1,x2} function anywhere in my book or lectures, I also have never seen anything about p1 not equaling p2. ...
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### Name of scheme where two entities collude

Consider the following scheme that I remember from the sitcom Zach and Cody: One person is selling very spicy food in a hotel lobby, and another person is selling glasses of milk at exorbitant prices ...
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### What is the problem of making an instrument valid on condition of a factor?

I suspect I have an instrument that is invalid on account of a specific factor. I read that I can control for that factor to make the instrument valid conditional on it. What would the issue of doing ...
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### Inflation and Interest rates in US. Is it in between a rock and a hard place?

There is no secret that our government(both republican and democrat) will need more money than they collect from taxes to pay their bills. The public debt is getting close to 30 TRILLION and the ...
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### Marginal utility and convex utility function

If we have a convex utility function, like the quadratic one, does the law of diminishing amrgnial utility still apply or do we have that the partial derivative of utility with respect to, say ...
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### Negative Interest Rates and Pension Funds

How do negative interest rates impact the future prospect and business model of (defined benefit) pension funds? What could be winning investment strategies for pension funds in a negative interest ...
33 views

### How can difference equations with an infinite summation be represented in matrix form?

I have derived the microeconomic foundations of a dsge model and I've obtained the IS and NKPC. I would like to represent them in matrix form to study the system. However the problem is that both ...
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### Finding wage of two complementary labor sources [closed]

Domestic and immigrant labor is complementary in this problem (r= -1). There are 4 immigrants and 12 domestic workers. Find the equilibrium wages for both. Production function F(LI , LD) = 120(LI+LD)^(...
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### Effects of a decrease of the policy rate on net exports

We've recently worked in class with the IS-LM-UIP model (where UIP stands for the uncovered interest rate parity). The central bank chooses the policy rate. Hence, the LM curve is horizontal. The IS ...
37 views

### Monte carlo simulation for macroeconomist

I would like to know if it is useful to learn Monte Carlo simulations if I want to focus on macroeconometrics ? Or even is it useful outside of academics ?
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### Is it easier to borrow money during a recession or high inflation period?

During a recession the FED applies expansionary monetary policies while during high inflation periods it contracts the money supply which respectively lowers and raises interests rates. Given that ...
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### Why are NNP/GNP loosing there significance?

It is a well known fact that NNP and GNP are loosing their significance with time. I tried to find a solution to this issue and in a book I found the following statement: "NNP and GNP are ...
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### Power System Economics Question

I'm not sure where should I post this under since it's both about Power Systems and Economics but I want to understand the economics aspect of it. This is the answer: This is my attempt, tabulated: ...
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### Does GMM have any assumptions that you can't test empirically (and must instead argue qualitatively for)?

My understanding is that you can empirically test some of the main assumptions required for using a GMM estimator. Namely, I understand that you can test over-identifying restrictions with Hansen's J ...
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### Derive IS-Curve (Y)

An Economy has a GDP described by the following: $Z=C(Y −T)+G+I(r)$ $C(Y −T)=C_0 +C_1(Y −T)$ $I(r) = I_0 − I_1r$ where Z is planned expenditure, Y is GDP, T is tax, G is public consumption, I is ...
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### Renter exodus from London, what does this mean for specific companies?

Which companies derive most of their income for rentals in London? There is an exodus of renters from London and record buy to let houses being put up for sale. what does this mean for the London ...
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### How to calculate how much the median income earner has to work to earn the country’s minimum wage?

I want to figure out how much time [hours/week] the 2017 median income earner for several countries had to work to earn the country's 2017 minimum wage. The best data I've found is: Median disposable ...
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### What is the difference between “borrowing” money and “printing” money?

When a country's government has a budget shortfall, that country has to find some way to pay its contractors/emplooyees. Unlike a normal company, the government can't simply go to the bank and ask to ...
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### How do I convert (this OECD data of) median disposable income to pre-tax income?

I want to convert the "Median disposable income (current prices)" found in the link below to Median pre-tax income (current prices). How do I do so? Are there for example any appropriate ...
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### Does IMF consider the international reputation of a country?

Hi I have three question below which I tried searching on internet and read a lot of literature as well. Besides all the literature sources I need to know some practical knowledge of people out there. ...
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### Why would a digital Yuan (or some other national currency turned into a CBDC) “help fast-track international settlements” in that currency?

I'm trying to understand the basis of this claim As the main mode of transaction in the world's second biggest economy, China's currency should be a natural contender for the spot. However, the U.S. ...
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### Offer curves in general equilibrium

I'm having trouble understanding how to find the offer curves in general equilibrium. Is there a general way that we can use to find it? I can understand the Pareto set and contract curve but when it ...
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### Relation between GDP and HICP (harmonised Index of Consumer Prices) [closed]

the title says it all. What is the relation between HICP and GDP. And will there be a high inflation just before recessions? So the upper graph is the percentual change of the BNP from the last year, ...
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### Payoff from an option contract

In period 1 the consumer of type $\theta$ selects an option contract consisting of an up-front fee, $B>0$, and exercise price, $\bar{R}$. The consumer pays $B$ at the end of the first period. In ...
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### What is “other shareholders funds” on a balance sheet? [closed]

I am trying to understand a balance sheet. Shareholders funds are divided into Capital and Other shareholders funds. However, I don't have a clear idea about what the difference between the two is. ...

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