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Categorical variable as explanatory variable (right hand side)

In a linear probability model, or any sort of regression, one can use fixed effect estimation by simply adding in a STATA code i.something. This "something" can be either a village, a county or a ...
66 views

Do I understand the second welfare theorem correctly?

As far as I understand, the second welfare theorem says that all Pareto-optimal allocations can be reached by market equilibrium on free competitive markets. Yet it seems that this understanding is ...
103 views

How to estimate loss of customers due to customer support inefficiency?

I have a data about customers and their activity on a website for a two-year period. Also, I have a customer support work evaluation data for a shorter period of that two-year period. The question is: ...
29 views

Not sure how to use this formula for auctions

In my textbook I was given this formula for auctions: As far as I understand, $N$ is number of people who place bets, $P_{personal}$ means my subjective value of the current lot (it's also assumed ...
45 views

How to find right MRP_L in this economic problem?

Economic problem from my textbook (here is my translation from Russian): There is a firm that is both monopoly and monopsony. It's monopoly on market of its product and it's monopsony on labor market ...
159 views

Balance of Trade ( Surplus and Deficit)

I'm new to economics. I want to ask that what remedies that the government can actually employ to address the deficit/surplus in the fish trade balances over time? My attempt, Trade deficit (i) The ...
56 views

Why are some natural monopolies protected by the law from competition?

It just doesn't make sense. Any try to challenge a natural monopoly is fruitless (at the best) or an economic suicide (at the worst). Why would you forbid companies from doing such stupid move? It's ...
263 views

Consolidated budget constraint

This is an excerpt from a data source that I am using. According to the authors it has been created from accounting identities such that it matches theoretical variables used in macroeconomics. For ...
200 views

Balanced budget and change in taxes

Consider a simple Keynesian economy in which the government expenditure ($G$) exactly equals its total tax revenue: $G = tY$ where $t$ is the tax rate and $Y$ is the national income. Suppose that the ...
76 views

Good book/article that goes into depth about transversality conditions?

I know how to derive the transversality condition in simple models like the Ramsey model. However, I am looking to develop a deeper understanding of transversality conditions in more complex models. ...
180 views

Why can we see the Current account as variation in NIIP?

Let's designate the Net International Investment Position(NIIP:it's the net international wealth of a country), as $B_t$. Why can we see the current account at time t, as $CA_t=B_{t+1}-B_t$ , when we ...
31 views

How does the bank of Canada define “output”

Im trying to replicate the forecasts of this VECM model presented by the bank of canada in The M1 Vector-Error-Correction Model: Some Extensions and Applications Context (from page 24 in the pdf). ...
23 views

What would be the possible effect on a country's economy if private banks are declared as non-profit?

Suppose, there are 100 banks in a country. 50 of them are government owned. What would be the possible effect on a country's economy if private banks are declared as non-profit? I.e. they can not ...
27 views

Suppose the government pegs an exhaustible resource, at a price $P^*$. I found out that the shadow price (initial price of the resource if government didn't peg) would be $$Q_t = ( \sigma i S_t )^\... 0answers 38 views What was the impact of the Great Recession on the economics curriculum O. Blanchard claims that the discipline needs at least 5 types of models. Did the Great Recession have an impact on the economics curriculum? What are the discipline areas that were affected/'reformed'... 0answers 432 views Euler equation - Intuition behind setting \beta(1+r)=1 if the economy is closed The Euler equation is:$$u(C_{t})=\beta(1+r)U(C_{t+1}) In my lecture notes, I noted that my prof. said something like: Since our economy is closed, we are going to assume that $\beta(1+r)=1$ ...
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In Chile, most of prices are measured in the local currency, the peso (currency code CLP). However, there are two other units of account. These are the UF and the UTM. These keep track of the real ...
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Which way is the pendulum swinging with regards to “Access to Capital”

The premise is said best by the economist George Magnus in 2015: "Advances in technological productivity gains are benefiting a limited number of people. The principal rewards of modern technology ...
600 views

Price optimization with demand forecast

I have one year sales data of a retail company and lets say I am forecasting the next month sales for the product. I have got the sales using time series in R. Now I want to forecast the price as well....
93 views

Do changes in the interest rates affect the supply of currency?

I understand how changes in interest rates affect the demand for currency (i.e. foreign exchange), but was wondering whether there is also an effect on its supply. I am hypothesising the following: ...
28 views

Corporate use of offshore cash

Recently Microsoft floated a \$17 billion bond to finance the purchase of LinkedIn (remind me to delete my account). Some might wonder why a company with nearly \$100 billion in cash would need to ...
45 views

Is it true that the eight richest men have more wealth than the bottom 50% of world population?

This statistic from Oxfam, an anti-poverty consortium, has been reported in prominent media outlets (example). Other articles dispute this statistic as misleading due to flimsy assumptions about debt (...
26 views

Vector Autoregression - Resource request

I am looking for resources that give a self-contained introduction to vector autoregression. To be a bit more specific, I am interested in VAR models and their application to isolating and ...
55 views

Does only enough money exist to pay the principal on all debts, and none for the interest or for anything else?

This is reported to be the testimony of Marriner Eccles, Governor of the Federal Reserve Board, before the House Committee on Banking and Currency, on September 30, 1941. Does this mean that only ...
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It is a common conception these days that exposure to international trade and its adverse effects is a major factor in the rise of protectionist parties or candidates in the most advanced economies (...
36 views

Helicopter Money: a tax on banks?

In this text of voxEU, the author are trying to explain why helicopter money will not have it's expected effect. For that conclusion they try to explain the different schemes on how Central Banks pay ...
116 views

Graphing Volunteer labour Supply

I'm wondering if there is a method by which we can visualize a firms decision to rely on volunteer labour. I have an idea but I'm unsure if it is correct, please tell me if there is an issue with my ...
17 views

Are there examples of businesses that profit from helping consumers coordinate better?

In economics, its often assumed that individuals are unable to coordinate. Moreover, its often assumed that one of the roles for the government is to help consumers coordinate. However, its also ...
114 views

Seigniorage, or monetary financing of fiscal policy

In reading a textbook on seigniorage, the authors define seigniorage as $\frac{\Delta H}{P}$, where $\Delta H$ is the change of high-powered money, and $P$ is the price level. In the IS-LM model, and ...
848 views

Binding and slack constraints in adverse selection problem

When I am dealing with a constrained maximization, once I face constraints with inequality sign, I have to understand which one are binding and which others are slack. If I find that a constraint is ...