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1answer
174 views

Meaning of innovation in the wealth creation process

Is there a formal definition or measure of wealth that captures the notion that with improving technology "life gets better"? A stupid example of what I mean would be the invention of the iPhone. I ...
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1answer
57 views

Confusion regarding debt to GDP ratio

While looking at debt to GDP ratio of various countries, I had difficulty with different figures on different websites. Look at this which shows China's debt to GDP ratio as 43.9%: http://www....
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votes
1answer
63 views

Positive interaction term with one negative component?

Say I have an augmented growth regression, where my Y is GDP growth, and my Xs are the classical MRW variables, + international aid + corruption + the interaction term between the two. Basically, I'm ...
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votes
1answer
700 views

Taking the derivative of capital per effective unit of labor in the Solow model [closed]

I'm taking an intro macro course, and my calculus is pretty rusty. I'm going through some lectures notes right now where they derive the growth rate of capital in the Solow model like so: I'm ...
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votes
1answer
242 views

What does the area defined by two different values for quantity under a supply curve represent?

Assume that a and b (b is greater than a) indicate the quantity of supply on a linearly increasing supply curve. How can be the area formed by those two points under the supply curve interpreted? The ...
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votes
1answer
26 views

Question regarding demand schedule and equilibrium consumption [closed]

Please refer to the two images posted at this link: http://imgur.com/a/si3ko Referring to Page 2, I'm not quite sure what the author is trying to say regarding the two bracketed portions. Considering ...
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votes
1answer
184 views

Are Terms of Trade reciprocal?

I am trying to learn the meaning of Terms of Trade, but I'm confused. From the wikipedia article, it says that TOT is the ratio of the value of exports over imports, and since for the other country ...
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votes
1answer
34 views

Help in interpreting data - Deficit

I was looking at the deficit for different countries http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=gov_10q_ggnfa&lang=en How shall they be read? For instance Greece had a -15% in Q4 ...
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votes
1answer
692 views

Simple Keynesian model of income determination

When determining equilibrium, we take consumption equal to C= ¢ + c' y where ¢ is the autonomous consumption or minimum consumption that would take place even in absence of income. What could be the ...
0
votes
1answer
41 views

What happend to the dollar value in the time of the housing crisis

I am wondering what happens to the value of the coin in a country with an housing crisis. Take the USA as an example: They had a housing crisis and I wonder how it effected the value of the dollar and ...
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votes
2answers
139 views

Terminal Condition for American Put Option

In a recent book I read the author mentioned the terminal condition: $$\mathop {\lim }\limits_{t \to T} V(S,t) = \max \left\{ {X - S,0} \right\}$$ This is intuitive to understand. Then, the ...
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votes
1answer
278 views

Jordi Gali Euler Equation Beta

Derivation euler equation in gali book, I don't understand " β " transformation. Jordi Gali book, page 42 There is no explanation gali book the notes which are prepared by Drago Bergholt (Page 6) ...
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2answers
68 views

CDO & CDS on medical patients

As far as my knowledge goes, a "collateralized debt obligation" (CDO) restructures existing bonds into "layers" of debt whereby each layer has similar kinds of bonds with similar kinds of features in ...
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votes
1answer
54 views

Maximum level of profit attainable when discount factor is too low

This is a question I encountered during my undergraduate studies in Industrial Economics. So the question goes like this: Consider two identical firms with constant marginal cost $c$ which ...
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votes
1answer
91 views

How can trailing and forward P/E ratio of main stock markets show such huge difference

I've recently found this web page, listing the average P/E Ratios of main stock markets: http://www.zutosmoney.com/ Here I reproduce just a small extract: INDEX - Country - Trailing PER - Forward ...
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votes
1answer
2k views

Certainty equivalent and risk aversion parameter given utility function

I know this is rather easy but I do not have any example or material to really work from that I could find online. Consider an agent with a utility index over wealth given by $$v(w) = \frac{w^{1 - \...
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votes
1answer
287 views

Inferior goods, monotonic utility and strict concavity [duplicate]

Is it possible to have an inferior good under the assumption of a utility function which is strictly monotonically increasing and strictly quasiconvex? I do not think so, but I could not find a ...
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votes
2answers
38 views

Inelastic offer, tax paid by seller, who supports the charges

I have a small problem, I have a situation where we have a perfectly inelastic offer and a normal demand, then there is a tax that is paid by the supplier who supports the totality of the charges ? Is ...
0
votes
1answer
46 views

Are businesses included in economic institutions?

1st definition from businessdictionary.com: Network of commercial organizations (such as manufacturers, producers, wholesalers, retailers, and buyers) who generate, distribute, and purchase goods and ...
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votes
1answer
51 views

On Net interest [closed]

On my book it says that net interest is "The interest domestic businesses pay minus the interest they receive, plus interest earned from foreigners." But how can businesses receive interest?
0
votes
1answer
94 views

own and cross elasticity for many products

This publication uses this formula to fit a model to predict the demand of a product A: ...
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votes
1answer
113 views

The equation for the firm's demand for labour

I have been stuck on this for a few hours (actually a few days). I can't find much useful information on the web that has made it any clearer. Suppose that a firm’s production function of output Q is ...
0
votes
1answer
463 views

Showing the Utility Possibilities Frontier is downward sloping

The slope of the UPF must be equal to the slope of the MRT and the MRS. Is it therefore enough to show that the slope of the MRS is negative?
0
votes
1answer
42 views

Uses of loans during recession

I've noticed that certificates of deposit have dropped their interest rates in my country. This seems to be due to lack of trust in economic opportunities and has caused an increase of liquidity in ...
0
votes
1answer
38 views

Literature on Private Countries

Amidst Anarchocapitalist authors such as Murray Rothbard, are there any who discuss the possibility of privately-owned countries, with their own set of private laws, police services and courts?
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votes
1answer
50 views

Saudi Arabia motivations for OPEC production cut

I'm wondering whether one of Saudi Arabia's principle motivations for supporting OPEC production cuts is so that the price of crude oil will increase and so Saudi Aramco, Saudi's state-owned oil ...
0
votes
1answer
184 views

Solving a Cournot oligopoly game with N firms [closed]

This is the full question: Find all pure strategy Nash equilibria of the Cournot oligopoly game with $N$ firms facing linear demand $P = a − Q$ when the total cost for each firm is $c_i(q_i) = q_i^2$. ...
0
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1answer
170 views

Identify whether a good is giffen good or not and under what condition

Given the following partial information about a consumer's purchases.He consumes only two goods. In year 1, $p_1^1=p_2^1=100,x_1^1=x_2^1=100$ In year 2, $p_1^2=100,p_2^2=80,x_1^2=120$ Over what ...
0
votes
1answer
54 views

If I want to create my own currency model what would be the best basic options / things / ideas I need to look into? [closed]

First of all, I am from a IT background and currently writing my thesis on a system in which I am have to create a model of a nation. So to run the economy in this simulation (for now you can ...
0
votes
1answer
21 views

How will the value of the pound affect the British economy?

Given the recent massive decrease in the value of the pound, does this not equally devalue the British economy by a similar amount? Why does that not lead to an immediate large crash in Britain as ...
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votes
2answers
130 views

How can interest rates be so low?

Over and over again reputable economists and pundits like Alan Greenspan tell us that the 0% interest rates are "unsustainable", yet they are sustained. How can interest rates be so low? Throughout ...
0
votes
1answer
112 views

What is a bilateral currency swap line? [closed]

Please explain in simple terms. How exactly does it function?
0
votes
1answer
458 views

How to find a firm's cost function based on its production function [closed]

The question A firm’s production function is given by $$q=F(L,K)=L^{1\over{4}}K^{1\over{4}}$$ find the firm's cost function $C(w,r,q)$, What I know so far I'm aware that the Technical rate of ...
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votes
2answers
909 views

Calculating growth rate of capital when not in steady state

Given a Cobb-Douglas production function, the annual population growth rate, savings rate, alpha, annual depreciation rate, and annual technological progress rate, how would one calculate the growth ...
0
votes
1answer
314 views

Game theory vs Experimental economics

What are the main differences in the methods of game theory and experimental economics? Which method is better suited to analyze strategic behavior?
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2answers
72 views

How to find the discount rate at which two deals are equally attractive? [closed]

Dealer A will sell me a car for \$20,000 with \$2,000 down and the remaining $18,000 paid back over 36 months at a rate of 8% compounded monthly. Dealer B will sell me the same car for \$19,500 with \...
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votes
2answers
111 views

Adaptive expectations

I know expected inflation plays a key role in both the Phillips curve equation and the Fisher equation, but does it also play a key role in Taylor's Monetary Policy Rule? I'm asking this as I have an ...
0
votes
1answer
3k views

Formula for Effective Discount Rate of Discount Rate Series

what is the formula to calculate an effective discount rate of Discount Series? For EX, If Price of Product A is $X and Discount Series is given like 10%,20%,30%,5%,2%. How can we calculate effective ...
0
votes
2answers
72 views

Taking logarithms of variables [closed]

It is common to taking logs of variables when perform a regression analysis. But the observations will become negative after logs transformation when it is less than 1. Is this the possible concerns? (...
0
votes
1answer
172 views

Taxes and the economy as a whole

Does reducing taxes generally lead to better economic performance? Does it lead to slowdowns in the economy?
0
votes
1answer
35 views

Renminbi demand and CNY rates

I read something similar to here, http://www.businessinsider.com/onshore-and-offshore-renminbi-2014-2?IR=T, paragraph 6, that demand for renminbi drives down cny bond market? I can understand how ...
0
votes
1answer
107 views

Equilibrium in a labour market and price floors

I'm (very) new to economics, taking it as an introductory subject at the moment. I had a quick question regarding labour markets and minimum wages imposed as a form of government intervention. Is it ...
0
votes
1answer
30 views

Correct way to measure Defence budget of a country like India [closed]

I read that defence budget of the country is 2-3% of GDP, but isnt GDP irrelevant when we are talking about expenditure? Shouldn't it be in a ratio of military import/total import?
0
votes
1answer
20 views

Is there a good mechanism to incentivize leveraged firms to take less risks?

It seems that there are some circumstances, say when the government foresees a financial crisis, where it would like firms to hedge, take less riesk etc. However, leveraged agents benefit from risk, ...
0
votes
1answer
24 views

Basel affecting the bank behaviour?

In EU, Banks have changed their behaviour lately, e.g. as acting liquidity providers to certain markets like notes etc. Introduction of Basel III is probably one reason (tighter capital and ...
0
votes
1answer
28 views

Clarifying foreign direct investment and imports on International Transactions release

I would like to measure US corporations' investments in property, plants, and equipment abroad versus their spending on labor abroad. However, I'm unsure of the categorizations on the International ...
0
votes
1answer
236 views

Debt-to-GDP or Debt-to-Revenue?

Which is a better measure of the health of an economy between Debt-to-GDP and Debt-to-Revenue? Why?
0
votes
2answers
57 views

What is the formula for how many more I need to sell in order to justify raising cost?

I need to know the name and formula for this problem. I have widgets which have a certain lube content to them. We currently are selling the widgets for 3.00 each. The lube costs .50 cents for each ...
0
votes
1answer
467 views

Solvency and liquidity. How to understand them? Should Central Banks only lend to solvent but illiquid banks?

Solvency: Long-term liabilities are covered by assets(with value measured at maturity, not at market-to-market) Liquidity: short-term liabilities are covered by assets which can be sold in the short-...
0
votes
1answer
52 views

Directed technical change, Acemoglu (2002) framework - trying to understand how an equation is derived

You may have read Acemoglu (2002) on the topic of directed technical change. I am reading a similar research paper, and I could not understand how the author derived the final equation using ...

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