16 votes
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Conventions for reading mathematically rigorous academic articles in economics

Welcome to Economics Stack Exchange elasticity6565. I was asking myself the same question as an undergrad and found that others struggle with this as well. I am now at the end of my masters degree and ...
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8 votes

Doing a PhD Economics without background in formal theorems?

I did my undergraduate double majoring in discrete mathematics and economics. I went through the grad micro sequence, the math for economists grad course, and the game theory field course, though. So ...
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7 votes
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What is an IOU?

It stands for I-Owe-You. As in a promise.
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7 votes
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Does risk aversion cause diminishing marginal utility, or vice versa?

I think I've found an answer to my question, in this excerpt from Nobel laureate John C. Harsanyi's 1994 paper "Normative validity and meaning of von neumann-morgenstern utilities", presented at the ...
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7 votes

How to close the gap between non-Econ background and Macroeconomics

Sorry if this sounds harsh, but: You need to start asking more. You're not stupid for asking questions - you're stupid for not asking questions. Be upfront about your different background and ask ...
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7 votes

Learning post-keynesian and marxist economics

.. what explains the lack of pluralism in the current academic landscape? A) This is mostly due to empirical revolution in economics. In the past economics used to have a lot of schools of thought (e....
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6 votes
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Solving Kaplan and Menzio: Shopping Time

UPDATE After e-mail communication with one of the authors G.W.Kaplan, I recalibrated the value of the vacancy-posting cost parameter $k$ in order to obtain a cross of the two nullclines for $u=0.05$. ...
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6 votes

Inflation and economic growth

Macro regressions, especially annual ones, have in general two flaws: They have small sample problems and They have no proper identification In order to circumvent problem #1, people often assume ...
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6 votes
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What is the definition of a "Stackelberg leader-leader equilibrium"?

A leader-leader Stackelberg is a situation in the Stackelberg model where both firms believe they are leaders. This leads to global production being much higher than expected by both firms, as they ...
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6 votes

Is there a way to link Berge's theorem of maximum to Envelope theorem?

They are related and usually fall into the same discussion, but as @Alecos mentions in the comments, the two theorems show different things. I suppose the connection that you're after is the fact ...
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  • 9,155
6 votes
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Take-it-or-leave-it PBE

After posting a bad solution yesterday I believe I got a better one: The strategy of the buyer consists of two functions, $(f_1(v,p_1),f_2(v,p_1,p_2))$ where both functions map to $\left\{A,R\right\}$...
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6 votes
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If $a$ and $b$ are two pure rationalizable strategies, can $0.5a+0.5b$ fail to be a rationalizable strategy?

Yes. Consider a two player game described by the following matrix \begin{array}{|c|c|c|} \hline & L & R \\ \hline a & 3,0 & 0,0 \\ \hline b & 0,0 & 3,0 \\ \hline c &...
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6 votes
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Why are some economists remarkably productive?

A short answer to your question is both yes and no. You have to first define productivity: productivity, in my opinion, cannot simply mean publishing the number of articles, but rather, their impact. ...
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Why are some economists remarkably productive?

Another aspect is a little bit about network effect. Suppose for a one moment that there are two researchers, one in USA and another in Asia, having both the same paper, do you really think that two ...
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Is it necessary to ask permission before including someone in the acknowledgements of a economic research paper?

In short, no it is not necessary. I have never asked anyone for permission and I have never been asked. The people I thank usually have not read my paper (rarely anyone does, to be honest), but we ...
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5 votes

What is the usefulness of approximating an optimal decision rule that close enough to steadystate in RBC model?

Higher order approximations such as those generated by Dynare may help a bit in terms of expanding the neighborhood in which the approximation works well, but the fundamental problem remains that the ...
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5 votes
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What is the usefulness of approximating an optimal decision rule that close enough to steadystate in RBC model?

Side note: This is one way of solving it - the alternative would be formulating a Bellman equation and iterating on that. If you assume that the real economy is on or sufficiently close to the steady ...
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5 votes

Are there conventions in economics for coding the distance between states?

I think the answer depends on who is impacted by your measure of distance and for what purpose. Kennan and Walker (2011) Econometrica measure distance between states as "the great circle distance ...
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Reverse auction formula

A first price standard and reverse auction are formally equivalent to each other, and the same method can be used to solve both: First Price Auction In a first price auction, $n$ bidders choose ...
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What are estimates of the elasticity of demand for credit with respect to interest rates?

These papers look relevant, to one degree or the other: Karlan, D., & Zinman, J. (2009). Observing unobservables: Identifying information asymmetries with a consumer credit field experiment. ...
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5 votes

Piketty's Return on Capital

Although I'm not sure that Piketty ever directly discusses the exact definition of $r$, he does make it clear indirectly. On page 52 of the hardcover English-language edition of his book, Piketty ...
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5 votes
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Muth exposition of the rational expectations hypothesis

Muth assumes a model of "...short-period price variations in an isolated market with a fixed production lag of a commodity which cannot be stored". It is useful to remember that the model's ...
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5 votes

Does risk aversion cause diminishing marginal utility, or vice versa?

The utility function is a representation of preferences, which are traditionally inferred from choices. Preferences come before utility. I would not call the connection between utility and preferences ...
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5 votes
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Why does $\varepsilon_{x,p_x}^H =-s_y \sigma $?

First we need to define the elasticity of substitution $\sigma$. This can be a difficult and confusing concept. (If you want to have your mind blown, look at Table 2 in this survey by Stern, which ...
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5 votes

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

Neither of the two papers are clear enough as regards their applications of Statistics, so in this answer I will attempt a clarification. Gilovich, Mallone, and Tversky (1985) in their Abstract ...
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5 votes
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Is there a model for how much a philosopher produce in his lifespan?

Here is a somewhat creative (and very imprecise) answer: Let's assume that Philosophy creates no direct value for society (which seems implicit in your question). However, Mathematics and various ...
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Does julia's speed advantage over python make any difference for DSGE modeling?

There are certainly cases where the performance differences between Python and Julia matter, but solving a simple DSGE model is not one of them. There have been some formal comparison exercises (e.g., ...
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Does julia's speed advantage over python make any difference for DSGE modeling?

Julia is actually a lot faster than Python, also when running DSGE models. The NY FED moved their DSGE model to Julia because it allows them to: Estimate models 10x faster Complete 'solve' test 11x ...
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4 votes

Scaling Adjustment Costs

The New Palgrave Dictionary of Economics Article on Adjustment Costs gives a nice overview of the use of adjustment costs in economic models. What is the purpose of scaling investment costs with K ...
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