# All Questions

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16k views

### How does a country devalue its currency?

I recently read an article in the New York Times that talked about China devaluing its currency (which I believe is held to a peg against the US Dollar). My question is: specifically what tools does a ...
200 views

### Optimality of Zero Capital Taxation

The Chamley-Judd result of zero optimal capital taxation says that 0 capital taxation are required in order to maximize welfare at the steady state. The result is 30 years old. Still assuming that ...
644 views

### Why isn't the cost of shoes affected by their size?

I have noticed that many shoe selling shops I have visited have the same price tag regardless of the shoe size. Intuitively I'd think the bigger the shoe the more material and consequently capital ...
1k views

### Did previous researchers fail to detect the hot hand simply because of a statistical fallacy?

Many basketball fans/players believe that having made several shots in a row, the next shot is more likely to go in. This is sometimes called the hot hand. Starting (I think) with Gilovich, Mallone, ...
2k views

### What is the Gross Domestic Product (GDP)?

I suppose GDP is supposed to create a measure of a country's wealth/welfare, something easily indexable. But how exactly is it composed? And is its composition disputed? How good is it at measuring a ...
13k views

### What is an example of a utility function where one good is inferior?

Say the consumer has a standard convex, monotonic preference over Apples and Bananas. (Update: I'd like the preference to be as 'standard' as possible. So ideally we have diminishing MRS everywhere ...
14k views

### Outputting Regressions as Table in Python (similar to outreg in stata)?

Anyone know of a way to get multiple regression outputs (not multivariate regression, literally multiple regressions) in a table indicating which different independent variables were used and what the ...
662 views

### Intuitive explanation of $S(p,w)\cdot p=0$

Can anyone provide an intuitive explanation of why the Slutsky matrix right multiplied by the price vector yields a zero matrix? I know this is true but I do not really understand why it is true. ...
978 views

### Inflation and economic growth

Noticeable works about the impact of inflation on economic growth are dated back to the 90s. For example, Barro (1995): the impact effects from an increase in average inflation by 10 percentage ...
335 views

### What are the recent advancements in building a unified theory of bounded rationality?

It seems that bounded rationality models focus on explaining a particular psychological bias, in a very specific way. In particular, its seems that the state of the art consensus is that one size does ...
212 views

### Is there a folk theorem for repeated games on networks?

Games on networks have been studied extensively, however, I was not able to find a folk theorem for games on networks. Is there one or can it be derived from an already existing folk theorem? With ...
223 views

### Why plug deficits with bonds rather than printing money?

The UK is running a budget deficit £107 billion a year. Inflation is currently running at 1%. Given these facts, why do they plug the gap by selling debt rather than just creating the money to cover ...
815 views

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### How is it possible that all currency exchange rates are fixed w.r.t. to each other?

I wondered if it would be beneficial to exchange a currency through one or more "in-between" currencies. For example: instead of trading Russian Ruble (RUB) to Euro's (EUR), one would trade from RUB ...
816 views

### What is the evidence that econometrics has empirical value?

Economies are extremely complex systems with many variables, not to mention the fact that they emerge from the interactions of complex beings. I agree that economies have certain underlying principles,...
153 views

The basic idea of Schumpeterian Business Cycles is that new technologies require creative destruction but will yield positive growth. These two opposing forces have impacts onto the real economy at ...
4k views

### Which are the different Schools of Economic Thought?

It would be great to have a brief but comprehensive list of current (e.g. Austrian) and defunct (e.g Mercantilism) schools of thought in Economics. I think an ideal answer would include: the defining ...
815 views

### Game theory for showing interest and availability when dating

The more cynical (or perhaps realistic) of us would argue that there's a fair amount of game theory going on in the dating game. For example a classic ploy is 'Don't ring for three days, because you ...
693 views

### In the US, do high wages in regions like New York and California offset the high cost of living?

It's well understood that the cost of living in New York City vastly exceeds the cost of living in, say, rural Louisiana. It is also well understood that wages in New York City vastly exceed those in ...
3k views

### Why do low-budget films charge the same amount at the box office as super-high budget films?

In most occurrences, lower production costs translate into lower sales costs. Obviously there are other factors that influence price, including perceived value (affected by advertising), monopolies, ...
16k views

### Lexicographic preference relation cannot be represented by a utility function

I am stuck on the following exercise, related to preference relations and von-Neumann-Morgenstern utility function. A farmer wants to dig a well in a square field $[0,1000]\times[0,1000]$. The ...
8k views

### What is a substitute/complement in terms of mixed partial derivatives?

I am trying to understand how substitutability relates to mixed partial derivatives. I thought the change in marginal utility with respect to a change in the amount of $x$ would correspond to \frac{\...
1k views

### Money in the animal kingdom

Animals living in packs must have ways to decide how to distribute their goods among the pack members. Just like prices can appear in an exchange economy, prices could appear in pack economy. Though ...
28k views

1k views

### Wouldn't abolition of cash give rise to a substitute currency?

Some countries (e.g. Sweden and Denmark) plan to abolish physical cash in the future and restrict the use of cash to electronical deposits. One of the reasons for this is to prevent hoarding / boost ...
2k views

### Is it possible to have a modern economy without a central bank?

Many mainstream economists say that such thing is impossible. Is there some specific reason why the financial system needs a central bank? In this video http://m.youtube.com/watch?v=BcuAOdXD0Go, ...
900 views

### What is the calculable effect of counterfeiting on an economy?

I'm curious whether one can numerically calculate the effect that counterfeiting has on an economy. As I understand it, counterfeiting essentially amounts to theft of the wealth of everybody holding ...
854 views

Basically I need to replicate Hartley's 'A User's Guide to Solving Real Business Cycle Models' (http://www.econ.ucdavis.edu/faculty/kdsalyer/LECTURES/Ecn235a/Linearization/ugfinal.pdf). Specifically, ...
326 views

### Are there any states that don't have debt?

I've not been able to find any states that don't have debt to other states. This, to me at least, seems really strange. Are there any nation states that are not in debt to other states, if so which ...
537 views

### Is it possible to derive indifference curves given marshallian demand function?

In a two good world, will a marshallian demand function the likes of D(p,m) where p is the price of one good and m the income yield a utility function or ...
5k views

### What is the purpose of measuring GNP?

I know that the GDP (the value of all final goods and services produced within a country during a given period of time) is useful for determining the productivity of a nation, the size of the nation's ...
Marginal cost is defined as "the change in the total cost that arises when the quantity produced is incremented by one unit." And given a total cost function $C(q)$ that's differentiable, the marginal ...