All Questions
15,504
questions
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Is it possible to maintain economic equality in a society?
If the governor (or administrator) of a small town decides to keep the town economically equal by taking away the wealth of all residents and then redistributing it equally among the residents. In ...
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0
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7
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Long Run Model of Oligopolies After Recession
I am currently investigating about the long run impact of the COVID 19 to the US airline industry. Is there any specific (long-run) model that I can use for oligopolies (for 4 main companies)? Because ...
3
votes
1
answer
25
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In revealed preference (RP), is any two points $x,y$ related by the indirect revealed preference relation?
Let $X$ be the closed compact convex set of alternative and $B$ be a closed compact convex subset of $X$. $C$ is defined on all closed compact convex set $B\subseteq X$.
$X$ is ordered by a strictly ...
- 1,866
1
vote
1
answer
28
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Conditions for an interior solution to the UMP
I was wondering under what set of conditions one is allowed to assume an interior solution to the Utility Maximisation Problem. In most of my classes and lecture notes, interior solutions are assumed ...
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4
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Ordered Logit Model: Marginal Effects Signs Opposite
I'm deeply stuck in an issue in my research paper's methodology. I'm getting the following disparate results for my marginal effects.
In my Ordered Logit model, I have Y = Trust in banks (4-Max trust,...
- 1
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1
answer
73
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Why does the Substitution effect always have to be negative?
I understand why the income effect can be positive or negative depending if the good is normal or inferior. but why does the substitution effect always have to be non-positive?
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2
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answers
24
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Why does the voter paradox entail 0 turnout?
The decision to cast a vote (under a simplistic FPTP two-candidate model), as formalised by Downs can be written as follows:
$pB \geq C$
where $p$ is the probability of you changing the outcome, $B$ ...
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14
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Good tutorial on constrained optimization with state switching (macroeconomics)?
I am looking for some tutorial (website, book, video or even answer that explains it directly) that explains how to solve dynamic constrained optimization problem with state switching. Preferably the ...
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1
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26
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What is the issue in mapping verbal concepts to math symbols without proper justification, in economics?
I am really sorry for the vague question. I was going through some research on excessive math in economics, and I stumbled across this thread Criticism of Math in Economics
One of the comments was - &...
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21
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A question about an exercise in Hal R. Varian, Microeconomic Analysis (1984), Ch.3 Exercises 3.1 (c), Page 48
I have a question on the following exercise:
A competitive profit-maximizing firm has a profit function $\pi(w_1, w_2) = \phi_1(w_1) + \phi_2(w_2)$. The price of output is normalized to be 1.
(c). ...
- 65
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19
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Find a choice function such that WARP or SARP is violated
WARP implies choice function is raionalizable.
Say we have a choice function $C(B)$, $B$ is a closed convex compact set. I am looking for a intuitive example of $C$. The $C$ is economic meaningful, ...
- 1,866
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1
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64
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How to show there is no a Walrasian equilibrium?
There are 3 agents, one seller and two buyers. There are two indivisible goods, apple(a) and banana(b), and one divisible good, money(m). The seller's endowment is $W_s=(1,1,0)$, and buyers's are $W_{...
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4
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Can I use secondary data to run LA AIDS model in R
Can the Almost Ideal Demand System analysis be done using secondary data
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31
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how to derive that golden rule steady state = alpha in the solow model?
I have successfully derived the Golden Rule steady state for capital, but I'm struggling to derive the saving rate = equal to alpha (α) for the Golden Rule level. Have I made an error in my ...
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56
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Who is a personal computer buyer in 80s?
There are many materials devoted to the rise of the personal computer industry. Some of them focus on technic aspects. Like "IBM PC was cheap and has open arcitecture. So it won Atari, Commodore ...
- 153
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36
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Variance of OLS Error Variance Estimator
Consider a model $Y=X\beta+e$ and define the OLS error variance estimator as $\hat{\sigma^2}=1/n\sum_{i=1}^n \hat{e}_i^2$, assuming that $ E[e_i^2]=\sigma^2 $ More precisely I want to derive the ...
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23
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Why has the price of laser eye surgery not changed?
Within the USA, I have long heard rumors that since laser eye corrective surgery is not often included in insurance plans or subsidized by governments, the price of laser eye has remained relatively ...
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1
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28
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Can FOSD-transitivity replace the transitivity in utility representation theorem?
Let $\succsim$ be a complete, non transitivity preference relation. I wonder if FOSD-transitivity implies transitivity.
The primitive is the space of lotteries $p_1,p_2,p_3,...$. We say the preference ...
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1
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31
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Can a Subgame Perfect Equilbrium consist of a weakly dominated action?
I was reviewing the Market Entry game and observed that 'being mean to the entrant' is weakly dominated by 'being nice to the entrant.' Coincidentally, 'being nice to the entrant' is also part of the ...
1
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1
answer
13
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What is the meaning of "Nominal GDP was converted to 2021 dollars using the GDP Price Index" in ERP 2023?
Reading the Economic Report of The President 2023, there is a note under the real GDP graph stating: "Nominal GDP was converted to 2021 dollars using the GDP Price Index"
What I understand ...
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22
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Deriving the tax incidence formula -- what am I doing wrong?
I'm trying to derive the tax incidence for an excise $t$ so that producers receive $p$ and consumers pay $q=p+t$ per unit. The formula I am seeing everywhere is some version of
$$
\frac{\mathrm{d}p}{\...
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1
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21
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Internationalization of Chinese Yuan, and Chinese exports?
If Chinese Yuan is internationalised and more countries use it to settle payments, then wouldn't that cause strengthening of Chinese Yuan and make Chinese exports uncompetetive ?
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63
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About Theorem 3.5 (The Finite-Approximation Theorem) in Game Theory: Analysis of Conflict by Roger Myerson
I am study infinite strategy set using Myerson's Game Theory textbook. The author stated the following theorem (Theorem 3.5) but did not prove it. I tried the proof, and would really appreciate it if ...
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37
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What is a very very famous example of structural estimation?
I took a behavioral econ class and learnt the "structural estimation" of risk-aversion parameter.
Later some friends told me that what I learnt is too simple when I was bragging about my ...
- 259
1
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40
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Durable goods in a (two sector) necolassical growth model
i want to add a firm to a neoclassical growth model that produces a durable good which it rents out in each period to the consumers.
Right now i'm using the following approach:
The firm maximizes: $\...
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0
answers
20
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Heterogeneity analysis for a randomised experiment
Suppose that you are planning a randomised experiment and will estimate how effects vary with baseline covariates. One simple approach uses interactions. That is, if $Y_i$ denotes the outcome of ...
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24
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Definition of semi-elasticity
The "$x$-elasticity of $y$" is defined as $\epsilon = \dfrac{\partial y/y}{\partial x/x}$.
The $x$ goes down, and the $y$ goes up.
But we have two definitions of semi-elasticity:
$\epsilon_1 ...
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60
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1
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46
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How can I find a Radner equilibrium?
Consider an economy with 2 consumers and 1 good. There are 2 dates, date 0 and date 1. At date 1 there are 3 states of nature. The utility functions for the 2 consumers are the same:
$$u_i(x_i)=\frac{...
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1
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1
answer
25
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Total cost and public cost of sports stadiums
I'm interested in doing data analysis on the cost of large sports stadiums (in the US). I have an excellent data source in "Financing Professional Sports Facilities" (Robert A. Baade, Victor ...
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0
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13
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Credit profile bank dataset for Machine learning
Can you advise please any credit profile Bank free available datasets for Markov chain and machine learning computational experiments? For my student masters thesis. Thank you.
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4
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Aggregate elasticity of demand in a differentiated products market
Is the notion of aggregate elasticity of demand applicable in a market for slightly differentiated products? Intuitively, it seems like it should. If market output can be expressed in a single number (...
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1
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1
answer
50
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If utility function is convex, what can be said about preference relation?
It is known that if a utility function is concave, then it is quasiconcave, and the preference relation is convex.
What can be said if a utility function is convex?
I've found on the Internet then in ...
- 125
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1
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37
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About infinite strategy sets and $\epsilon$-equilibrium from Game Theory: Analysis of Confilct by Roger Myerson
I am studying infinite strategy sets using Myerson's Game Theory: Analysis of Conflict. On Page 143, he defines an $\epsilon$-equilibrium as follows:
Definition For any nonnegative number $\epsilon$, ...
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1
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1
answer
69
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If utility function is homogenous of order 1, then partial derivatives of demand function are equal
Prove that if $U(\alpha x)=\alpha U(x)$, then $$\frac{\partial x_i(p,w)}{\partial p_j}=\frac{\partial x_j(p,w)}{\partial p_i}$$ for any $i$ and $j$.
I've proved that $x(p,\alpha w)=\alpha x(p,w)$, but ...
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0
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32
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Second-degree price discrimination exercise
A monopolist produces output with constant marginal cost equal to 1. There are two of
consumers that are potentially in the market for the good. Consumer A has inverse demand
function
$$p_A(x) = 7 − x,...
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1
answer
19
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Marginal and Average costs for constant returns to scale production function being constant
Suppose that we are dealing with a production function $q = f(k,l)$, of inputs capital and labor. If this function exhibits constant returns to scale then I know that both the marginal cost and ...
- 1
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0
answers
19
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Engine efficiencies on small scale ( ice engines vs turbines
A formula one engine is around 51% efficient (and if it weren't for the regulation and rules it might have been close to 55 to 60% efficient read somewhere in Google) that the extreme side but there ...
0
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1
answer
36
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Showing UMP and EMP do not exhibit duality if the assumption of local non-satiation is absent
I have been trying to use the contradiction method to prove this, but it does not seem to be working.
Suppose $x^*$ is optimal in both EMP and UMP. Then $u(x^*) \geq u(x')$ for all $x'$ in $B_pw$.
And ...
1
vote
0
answers
33
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Why would bank runs lead to a decrease of the total quantity of money supply M1?
It‘s specifically about the German banking crisis of 1931. I get how the banks increasing their reserves and cutting their loans (starting 1930) would cause money contraction (at least of M1). Doesn‘t ...
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0
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19
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Why cant other country Imitate China give people work in place of relief subsidies? especially country with low-employment rate?
From my shallow perspective as a Chinese, whenever there is a low economic growth rate, there is a massive infrastructure building plan as to give people work in place of relief subsidies to stimulate ...
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1
answer
22
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What is the difference between "The effects of Monetary Policy" and "The effects of Monetary Policy Shock"?
I know this may be a silly question. I always thought these were different but some people in the literature use them interchangeably and I was wondering are they different? If so, how are they ...
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1
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21
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Is my understanding of Arrow's dictatorship correct? The dictator is free to update her preference and the social choice will always follow her taste
Suppose $R$ is a social ordering, $f$ is the social choice function, and $R_i$ is an individual preference. A profile of individual preference is $<R_i>$.
$f(<R_i>)=R$
Suppose $i=1$ is ...
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1
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23
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Which Spanish scholastic economist said that economies could not be controlled even if one could track every transaction?
Which Spanish scholastic economist said that economies could not be controlled even if one could track every transaction?
I think the context was an argument against Keynesian economics, Cartesian ...
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37
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How to add a linear contraint between state variables to a current time Hamiltonian?
Let's say I have an objective function $F$ with state variables $A,B,C$ and relative equations of motion, I can create the current time Hamiltonian with $H_C = F\{A,B,C\}+\alpha * \dot A+\beta * \dot ...
- 307
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27
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Equilibrium asset prices of a risk-free bond and a stock
Setup:
Two-period economy with two equally likely states of the world in the second period.
Two consumers with Bernoulli utility and same discount factor
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1
answer
22
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FOCs for profit maximization using a transformation function
I'm (still) reading the microeconomics textbook of Mas-Colell et al. On p. 135, the profit maximization problem (PMP) for producers is introduced; characterizing the technology as $Y = \{ y \in \...
- 283
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41
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Forecasting and Structural Breaks
Let's say I am using walkforward evaluation for forecasting a certain time series with ARIMA and I want to test for structural breaks. And then I detect structural breaks. How can I use this ...
- 101
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31
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Differentiation of a composite utility function
Taking the utility function $U: ln(c_1)+\beta ln(c_2)$ with $c_t=\sqrt{c_{Nt}c_{Tt}}$, t indicating a time period 1,2. Ignoring any b.c.'s.
I am having issues interpreting the marginal utility wrt $c_{...
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1
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66
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Auction with independent private values - An example from Game Theory: Analysis of Conflict by Roger Myerson
I have difficulties understanding the equilibrium analysis of the following auction game:
Suppose that there are $n$ bidders in an auction for a single indivisible object. Each player knows privately ...
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