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2 votes
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Economic examples of (sub)martingales

Applying the Law of Iterated Expectations on the defining property of a sub-martingale $E(X_{t+1}|X_1,\dots,X_t)\ge X_t$ we have that $$E\Big[E(X_{t+1}|X_1,\dots,X_t)\Big]=E(X_{t+1}) \geq E(X_t)$$ S …
Alecos Papadopoulos's user avatar
2 votes

Gali and van Rens: The Vanishing Procyclicality of Labor Productivity

A napkin theoretical exploration of the issue, to find possible directions to look for explanations, could go like this: According to the paper, the volatility of output and productivity has fallen …
Alecos Papadopoulos's user avatar
4 votes
Accepted

Is the development of "developing countries" evidence against the idea that former colonial ...

To complement @rocinante answer the argument described in the question silently assumes that growth can happen only if you steal from somebody. So if the past colonies cannot steal from anybody, they …
Alecos Papadopoulos's user avatar
1 vote
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"Normal" vs "actual" variables in empirical work

"Normal" in this context means "trend" (usually a simple linear trend, but in principle could be a non-linear trend by using for example the Hodrick-Prescott filter device). Decompose output $Y_t = T …
Alecos Papadopoulos's user avatar
1 vote

Reasons for the recent rise in long-term unemployment

I would "advise" to wait... a few more years! From the figure you provided, there is a perhaps slow but visible rising trend (with business-cycles-like "seasonality") for both the long-term and the mi …
Alecos Papadopoulos's user avatar