26 votes
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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 ...
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  • 1,428
20 votes
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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 ...
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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 ...
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  • 6,652
12 votes
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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 ...
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  • 238
11 votes
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Are there any states that don't have debt?

The classic answer here would be Libya and Brunei, but I think Libya now has debt. Brunei is a strange case in that it uses a joint currency with Singapore dollar, controlled by the monetary ...
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  • 1,428
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 ...
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  • 211
10 votes
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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 ...
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9 votes
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"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 ...
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8 votes
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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 ...
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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 ...
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  • 26.2k
8 votes
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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 ...
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8 votes
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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 ...
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8 votes
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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 ...
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  • 26.2k
7 votes
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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 ...
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  • 806
7 votes
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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 ...
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  • 3,177
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'...
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6 votes
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How does the russian interest rate raise will defends the Ruble from devaluation?

An interest rate is the return that a lender earns on money lent to someone else. If the interest rate is higher then it makes lending money more attractive because the return is higher. In ...
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  • 16.6k
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 ...
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  • 390
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 ...
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  • 923
6 votes
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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 ...
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  • 1,047
6 votes
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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 ...
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  • 3,177
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. ...
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  • 8,632
5 votes
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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 ...
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  • 26.2k
5 votes
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Fixed vs pegged exchange rate: What's the difference (if any)?

As Jason Nichols says, these terms are often used interchangeably. The general theme is that pretty much anything can be called a "peg" (except perhaps the case where two countries are literally ...
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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 ...
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  • 257
5 votes
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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 ...
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  • 6,652
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 ...
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  • 2,155
5 votes
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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 ...
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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 ...
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  • 26.2k
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 ...
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