26
votes
Accepted
Destroying the dollar
I think you misunderstand what "electronic money" is - moving electronic money around isn't simply a matter of sending the right "codes" - it is ultimately about asking the central bank of that ...
- 1,468
20
votes
Accepted
How do economic sanctions work? How do they not create an arbitrage opportunity?
As the other answer says the sanctions include prohibition on selling to third parties.
However, this still creates incentives to cheat on these sanctions. It is not always so easy to determine final ...
- 50.1k
13
votes
How could the economic cost of the world not speaking the same language be estimated?
To measure the costs of different people speaking different languages, researchers use a "linguistic distance" metric, see for example this paper. However, measuring the cost of linguistic diversity ...
- 6,865
12
votes
Accepted
On what basis do countries repay international loans?
Only sufficiently credit worthy countries are able to borrow money internationally in their own currency. In principle you are right that such a country could effectively default by expanding the ...
- 240
11
votes
How do economic sanctions work? How do they not create an arbitrage opportunity?
The short answer is yes, the impact of sanctions (and other export controls) on the market prices of goods can create an arbitrage opportunity for someone willing to violate or circumvent those ...
- 211
10
votes
Accepted
Screw foreign investment, lets just print money
"Foreign Direct Investment" is to be understood as bringing in an economy productive capital, and not just purchasing power.
When an economy is seriously below full employment (of capital ...
- 32.9k
9
votes
Accepted
"Buy a country", expression or possibility?
What do you mean? A country per se cannot be bought. The wealthiest man, Gates, has a net worth of around 67 billion USD (forbes). What could he buy?
GDP
Whatever it the country produces. The ...
- 10.6k
8
votes
Accepted
Why do all countries recognize foreign wealth?
Countries do not just stop recognizing foreign wealth because there are two kinds of wealth: real assets, and claims on the production of others; the values of both of these types of wealth are not ...
- 6,335
8
votes
Can a closed economy flourish?
It depends on what you mean by "sustained growth" and "flourishing markets".
Clearly the Earth as a whole is a big market. If you do not look at human made borders: the global economy is currently ...
- 28k
8
votes
Accepted
Why Nobel prize winners studied economics?
The Nobel Prize website is a good source of information. On the economics prize page they have a link to a page for each laureate. From there you can find, in particular, a biography for each prize ...
- 16.8k
8
votes
Accepted
What would happen if the US defaults on its debt?
The Russian default was an extraordinarily insignificant event compared with a current-day US default on all treasury securities. There are no remotely similar events to compare it to. This makes it ...
- 836
8
votes
Accepted
Why we need to control for the interation of year and industry fixed effects?
When you control for not just year fixed effects but instead year-region or year-industry it adds flexibility.
The year fixed effects controls in a flexible manner for the time-trend and is more ...
- 3,256
8
votes
Accepted
Is climate change an economic question?
Climate change in itself, its measurement and the fact that it is happening, and modeling its speed or trying to discover its causes (e.g., carbon emissions, methane emissions and so on) is not an ...
- 50.1k
8
votes
Accepted
Why does Russian ruble conversion rate to USD remains constant at 1 to 0.01?
Currently there are quite a few restrictions on US to Russia bank operations. The answer is that Google Finance gets its data for the exchange rates from a specific service, Morningstar, who are ...
- 28k
7
votes
What should we do if the subsample have the opposite results to the general results?
This sounds like a case of Simpson's Paradox. Did you control for fixed effects?
You might also have heterogeneity - there may be different results in developing vs developed countries.
Generally, it'...
- 3,422
6
votes
Why does the IMF push for austerity?
Why do so many people die in hospitals? Aren't doctors there supoosed to save lives?
The IMF is the trauma surgeon of government finances. When a country asks the IMF for help, it is because its ...
- 390
6
votes
Accepted
Ricardo's theory of comparative advantage
The solution concept used in Ricardo's modell is the competitive equilibrium. Let the set of countries $N$ be defined as $N = \left\{E,P\right\}.$ (England, Portugal) Then the competitive equilibrium ...
- 28k
6
votes
Why Nobel prize winners studied economics?
Maybe Lives of the Laureates?
Lives of the Laureates offers readers an informal history of modern economic thought as told through autobiographical essays by twenty-three winners of the Nobel Prize ...
- 953
6
votes
Accepted
How can the HKMA peg the Hong Kong dollar at 7.8 HKD/USD for so long?
To maintain the currency peg, the Hong Kong Monetary Authority (HKMA) has to buy HKD and sell USD when the currency comes under depreciation pressure and sell HKD and buy USD when the currency comes ...
- 1,067
6
votes
Accepted
What shoud we do when the expected treatment overlaps control sample in DID?
Your first quote seems to be given as an explanation of how they constructed Figure 1 (however I cannot be sure since you did not state pagenumber for the quote). Anyway, Figure 1 compares a treatment ...
- 3,256
6
votes
What should we do if the subsample have the opposite results to the general results?
tldr: As the other two answers also indicated, there is not necessarily a problem with your results. It might be the case that the two subgroups have different distributions of the covariates. ...
- 8,682
5
votes
Is the development of "developing countries" evidence against the idea that former colonial powers owe their headway to exploitation?
The recent development of many "developing countries" and "emerging markets" does not mean that Western colonial powers did not exploit them in the past.
Emerging economies owe their modern GDP ...
- 257
5
votes
Accepted
Omitted variables in gravity model
The omitted variable bias in gravity model is an important issue given that some factors are unobserved or difficult to quantity. To solve this issue trade economists tend to rely on various fixed ...
- 6,865
5
votes
Why are aeroplanes not made in one place?
Short answer
Airbus is a particular case of decentralised supply chain which came from historical and political reasons. Airbus is a consortium with several European states having a stake on it, which ...
- 2,155
5
votes
Accepted
What should we do if the subsample have the opposite results to the general results?
I'd interact the regressor you are interested in with a dummy for the country being developed and see what happens. Its entirely possible that the mechanisms at play in developed contries are ...
- 1,268
5
votes
How do non-US governments raise dollars?
Like all entities except the US government: they trade for it on the currency exchange market.
There are special cases when the US government gives aid without asking anything in return.
A government ...
- 28k
4
votes
Why does China buy so much U.S. Treasury debt?
As was said above, buying debt to affect the exchange rate and make Chinese exports more attractive may be one reason to buy these Treasuries. Surely all of these are not reinvested into buying more ...
- 6,516
4
votes
Destroying the dollar
When you go to spend the proceeds of the bank loan you do one of three things:
Transfer money to another account at the same bank
Withdraw cash
Transfer the money another institution
We'll ignore ...
- 16.2k
4
votes
Why does the Balance of Payments have to (more or less) equal zero
It was also really strange for me at first. I asked from many people who might happen to know the answer. However, they were all not 100% satisfactory. I think, Kenny LJ's answer is 99.5% correct but ...
- 41
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