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 ...
- 58.5k
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 ...
- 6,990
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 ...
- 255
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
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 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 ...
- 17k
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 ...
- 3,840
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 ...
- 58.5k
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 ...
- 29.7k
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'...
- 3,487
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 ...
- 983
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 ...
- 1,097
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 ...
- 3,840
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. ...
- 12.8k
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 ...
- 1,278
4
votes
Accepted
Why are aeroplanes not made in one place?
The main reasons for decentralization in aviation industry would be lower costs, but also (if not most importantly):
supportive public policies (e.g. local tax incentives, provision of low-interest ...
- 462
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
4
votes
Accepted
What does 'one dollar, one vote' mean?
It appears to suggest applying the way shareholders vote in a company to the political setting of democracy: each citizen will have as many votes as his/her monetized wealth. So the rich will have ...
4
votes
When can we expect China to become a developed country?
Just because a country has a lot of resources (including human capital), it does not necessarily form a path for a developed nation. China is also very involved in military conflicts. It just takes ...
- 69
4
votes
Accepted
Alternatives to avoid sanctions
You have most of the explanation here - the only missing piece is that as the de facto reserve currency of the world, almost all global trade is conducted in US dollars. Typically what happens is ...
- 1,806
4
votes
What is the difference between the international Fisher effect and uncovered interest rate parity?
They are related and have very similar implications but they are not the same. I will try to provide simple explanation here for more nuance you can have look at for example Mogaji (2019) and sources ...
- 58.5k
4
votes
Accepted
How to justify the treatment and control groups for Difference-In-Difference with staggered implementation of laws?
[W]hy do they need to write down "adopted a leniency law at some later point of time"? Because in Korea case, the word "our sample period" means "1995-2002" already.
...
- 457
4
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 ...
- 29.7k
4
votes
Accepted
How to visualize when the signs of two subsamples are opposite and example? (Simpson Paradox)
I guess you mean something like this here (taken from Fig. 4 of 'Simpson's paradox in psychological science: a practical guide'):
- 7,470
4
votes
Why is it Y=F(K,L), and not Y=F(K,L, Economic profit)?
If you are measuring $Y$ in monetary terms, then $Y=F(K,L)$ is the value of output. $F$ is about feasibility, not sure why you would include the size of economic profit therein. You can derive the ...
- 29.7k
4
votes
Can someone explain why sterling-dollar parity is bad?
Not really my topic, but I agree with the sentiment of the question. I have also always been puzzled by the finance media's focus on exchange rate movements. On the one hand, the country becomes "...
- 1,938
4
votes
Surplus in the Financial Account - BoP
Under fixed exchange rate the balance will be restored by shifts to the IS curve.
BoP equals to current account $T$ which depends on real exchange rate $q$ and output $Y$ and capital and financial ...
- 464
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