Questions tagged [macroeconomics]

Macroeconomics is a branch of economics dealing with the aggregate economy as a whole, rather than individual markets.

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New Keynesian Phillips Curve: log-linearization

I am facing some problems in log-linearizing the following equation: which is the New Keynesian Phillips Curve (NKPC). The expected result, once log-linearized, is: which is described by equation 46 ...
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In a deflationary recession, lower demand leads to lower prices. Does this contradict the law of demand?

In Principles of Macroeconomics (a free ebook available on openstax), the chapter on inflation says, regarding deflationary recessions: High levels of unemployment typically accompany recessions, and ...
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Isn't Germany supposed to have more of a market based financial system? [closed]

I read in the book, Indian financial system by Bharti V Pathak that Demirguc-Kunt and Levine did a research on comparison of fin. system of 150 countries and found a pattern that countries with low ...
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Difference between retail sales growth and consumption growth

In the comments in this article, professor Michael Pettis states that "By the way please do not assume that retail sales growth rates are a good proxy for consumption growth rates." I ...
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If a poorer country's currency appreciates equal to the dollar would their minimum wage decrease?

Currently $1 = 31.5 Thai baht, and Thailand has a minimum wage of 336 Thai baht/day (42 baht/hr). If the baht appreciates to the point where it is $1 = 1 baht would that 42 baht/hr minimum wage ...
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Why does the Silk Belt search for local concessions?

There are several examples of Chinese willingness to take control of harbours in foreign territories, with financial property as well as "landlordship": China gained concessions in the ...
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1answer
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Why do firms reduce both price and supply during a recession?

Could anyone explain why firms reduce both price and supply of goods and services during a recession with a practical real life example for better understanding ?
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Market for loanable funds

Can anyone explain why in some textbooks a government deficit causes a shift to the left of the supply curve (Mankiw) and in others a shift to the right of the demand curve (Krugman). Furthermore,how ...
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What are some negative/positive aspects from globalization in regard to developed countries?

I have read many articles on how globalization is helping developing countries, as more and more companies from developed countries have been moving their production oversees. However, as hard as I ...
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Kaldor's Theory of Income Distribution

I am referring to Kaldor/Keynesian theory of income distribution and I am having trouble understanding why the model won't work if marginal propensity to save of workers (S(w)) is more than the ...
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1answer
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About the 9 tests on Index number theory to evaluate the efficency of the different types of price indexes

Correct me if I'm wrong, I've seen a section in Wikipedia about Index number theory and I've understand it as "if an index x (Laspeyres, Paasche, etc.) satisfies all of this test, then it's 100% ...
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King–Plosser–Rebelo Preferences and Additively Separable

The wiki of King–Plosser–Rebelo preferences says that the utility function has the multiplicatively separable form $$u(C, L)=\frac{1}{1-\sigma_{c}} C^{1-\sigma_{c}} v(L)$$ and "in the limit case ...
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what is 'mid-year estimate' in following chart?

If it is mid-year population then, why it is so less in comparison to 'total population'
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Model specification of gravity model with Global Value Chains

I am trying to build a gravity model with the Global Value Chains indicator (backward and forward participation) as dependent variables. However, I wonder which are the diagnostic tests I should ...
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Representative Agent and Maximization

If there's a maximization of utility subject to a budget constraint-would it be always a representative agent model? Can it be heterogenous in some cases?
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India's exports and the rupee

There are several analyst asserting that a strong rupee would dampen India's exports, for example below article. Given that circa 80% of indian exports are invoiced in USD, why a strong local currency ...
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Derive and Decompose The Aggregate Elasticity of Substitution in CES Economy

The paper is Oberfield & Raval 2021. Consumers have standard Dixit-Stiglitz preferences consuming the bundle $$Y= \left(\sum_{i \in I} D_{i}^{\frac{1}{\varepsilon}} Y_{i}^{\frac{\varepsilon-1}{\...
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Are there any notable exceptions to the Impossible Trinity theory?

I am referring to the theory presented on Wikipedia and The Economist that states: The impossible trinity (also known as the trilemma) is a concept in international economics which states that it is ...
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Is there any consensus on investment spending?

I know there is never a total consensus among economist but do economist on average want to see investment spending increase? I speaking from the perspective of someone in the US.
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Will interest rates rise if a government runs a huge budget deficit?

My (very simple) logic is this: if government decides to spends a huge amount of money it does not have (meaning that it does not come from taxes) then it will borrow that money and thus create a lot ...
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1answer
53 views

Is there an economic argument against mass immigration?

(I know little about economics, so I'd appreciate an elementary explanation) Background for this question is that I was wondering what makes people say China's economy will keep growing while its ...
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How is GDP growth interpreted? For example, what does 6% q/q saar mean?

For GDP growth or other economic data, I noticed that it's usually quoted in q/q (quarter over quarter), m/m (month over month), and y/y (year over year). I've also seen q/q saar. Using GDP as an ...
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1answer
45 views

Small Open Economy (SOE) Vs. Emerging Market Economy (EME)

In the graduate-level macro, I often see a Small Open Economy (SOE) setting, e.g., in the textbook of Gali. Yet when I read papers, authors sometimes use the term Emerging Market Economy (EME). I ...
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Optimal residential location and multivariate Frechet distribution

I was reading the paper "Housing Constraints and Spatial Misallocation" by Chang-Tai Hsieh and Enrico Moretti. First they define the utility function $$ \ \ V_{ji}=\varepsilon_{ji}\frac{W_{i}...
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What is the implication of perfectly reversible capital?

I am reading the lecture note in labor economics by Acemoglu and Autor. In the chapter of basic search model, they assume capital is perfectly reversible, and argue that "Perfect reversibility ...
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1answer
36 views

What does it mean “non-Walrasian” or “quasi-Walrasian”?

In a recent NBER workshop, Robert Hall started a discussion with his first slide summarizing the macro literature. I am not very familiar with either DMP model or New Keynesian model and have no idea ...
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49 views

Multivariate implicit differentiation (Samuelson, 1948)

I am studying "The Simple Mathematics of Income Determination", by Paul Samuelson (from book is called "Macroeconomia (artigos selecionados)", by APEC-CAEN. It is the 1st chapter ...
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Can anyone explain why the Swiss balance of payments is not balanced (real data)?

While doing a little research I went to the Swiss National Bank's website and downloaded their data on the Swiss balance of payments. The data is here: https://data.snb.ch/en/topics/aube#!/cube/...
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Economic Surveys for Japan other than the Quarterly Tankan?

I am doing a project that requires economic survey data. I have already finished for Europe (which has the European Commission survey that is released monthly) and for the US (ISM Reports, National ...
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1answer
37 views

Does it make sense to talk about Bitcoin 'inflation' when little to no goods and services are listed in Bitcoin currency?

I think of inflation as a generalized increase in the price levels of a basket of goods and services. I should add that my understanding presumes that inflation should be measured in the same currency ...
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1answer
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What is meant by the sentence in the context of “Monetary Policy in India”? [closed]

To quote from the book, "Indian Economy by Nitin Singhania," this is what I found out,"It is a macroeconomic policy used by RBI to influence the supply of money." What is meant by ...
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1answer
47 views

Why does a higher risk aversion leads to a lower intertemporal elasticity of substitution?

Mathematically, a higher risk aversion leads to a lower intertemporal elasticity of substitution (there is an inverse relationship). But why? If I become more risk-averse, I would like to smooth my ...
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1answer
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A differentiation step in a economic growth model

I started studying Olivier Blanchard and Stanley Fischer's Lectures on Macroeconomics, but I couldn't follow the reasoning behind a differentiation step (at least I think it is something involving ...
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Are these two different cases when it comes to Forex Reserves?

In a forex reserve, what is the difference between "Buying US Dollars to pile up reserves" and "Using FPIs, remittances or exports to build up reserves" ? How differently do they ...
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Derive the Demographic Structure in the Steady State

I am reading a paper with following description on the demographics in their model: "... each (representative) agent lives for $T$ periods ... We assume that each individual has $e^{f}$ children ...
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6 views

External Commercial Borrowings in Indian Context

I was trying to understand ECB recently and while browsing through the RBI official page I have found that ECBs cannot be used for a) Real estate activities. b) Investment in capital market. c) Equity ...
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1answer
53 views

Non-trivial steady state

Consider the growth model with inelastic labor supply, full depreciation, log utility and CRS technology with the Bellman equation be defined as follows: $$V(k)=\max(log(k^\alpha-k')+\beta V(k'))$$ st ...
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1answer
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What are the justification of using 1990 or 2010 as benchmark in studies?

Normally, many international studies and documents using multiple-of-10 years (for example 1990, 2010) as the benchmark year. For example: Dong,2019, p.899 used 1990 as the benchmark to calculate the ...
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FOC for stochastic Ak Model

(Note: the other posts do not cover this part of the derivation) I have tried to compute the FOC of $k_{t+1}(s^t)$. I get that $0 = -\lambda_t(s^t)$; I can't see why the sigma remains for the FOC of $...
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Value function iteration with stochastic productivity's standard deviation

Hello I would like to know how would you discretize the AR(1) process of technology in a standart RBC model when there is stochastic productivity's standard deviation. Namely I have: Technology $Z_t$ ...
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36 views

Value function iteration with habit

I would like to know how I could write a value function when there are habits in preferences. I have the following equations: $$ u\left(C, t, H_{t}, L_{t}\right)=\frac{\left(C_{t} / H_{t}^{\kappa}\...
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Alternative ways of visualizing longitudinal macro data?

Problem: Visualizing longitudinal is challenging when the dataset has large number of panel members. A common ways to visualize such data is to either make a large set of small individual plots such ...
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Fluctuations in income

Consider the following income fluctuation problem. An agent lives for two periods, 0 and 1, and faces stochastic income in period 1. We are given this utility maximization problem: $$\text{max}\ U(c_0)...
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2answers
94 views

long run growth of money supply

I am trying to understand how the money supply (bank deposits + currency) grows over time. That's the end goal. This is the first part of my awful struggle. I'm superconfused, and almost everything I ...
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1answer
40 views

Derivations of trade balance

I am facing some problems in deriving the two equations for trade balance (from which we derive that the trade balance is zero within each country) in the article "A SIMPLE FRAMEWORK FOR ...
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1answer
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Data on inflation target on different countries around the world

Does someone know if there's a page, like a "global bank" online page, where one could see the inflation target for different countries? For example, in x country, for x' year, the inflation ...
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1answer
36 views

Why doesn't national savings, in aggregate, always equal to zero in monetary terms?

Referring to this question and this one Imagine you had a closed economy with two people and they both started off with $100 dollars. How would net savings in aggregate ever not be zero? Anything ...
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Does savings always equal investment? Are there any cases where savings could be removed from the economic system altogether and break the balance?

Assuming a closed economy, does savings always have to equal investment? If an individual produces a certain amount of a resource and saves it, that becomes part of the savings of the economy. However,...
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1answer
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Would a car that was produced last year but bought this year be accounted for in the GDP? [duplicate]

The equation for the GDP is: $$C+I+G+(X-M)$$ If consumers are buying new cars produced last year...would those still be included in the GDP?
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Can an appreciating currency lead to inflation?

If a currency, e.g. the rupee (INR), is appreciating against, say, the USD, it possibly means that there is a high demand for the former. India could have net exports, high remittances, increasing ...

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