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I used to think that microeconomics was relatively more scientific than macroeconomics. Early macroeconomics, in particular, suffered from a choosing models of agent behavior that made modeling easier but bore little relationship (or at least a highly disputed relationship) with reasonable behavior of individual agents. This led to the microfoundations ...


3

Those who decry the status of macroeconomics (to a certain extent), e.g. Krugman, do so because the macro field being closer to high-level political decision making is often involved in controversies, even if only a small part of the macro field itself is actually controversial (according to Krugman, 2013). OK, here’s how I read the Gordon and Dahl ...


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I think the big unknown here is how much they'll start to dissimulate and/or offshore their (new) wealth. According to one paper: A recent study by Brülhart et al. (2017) gives support to the plausible assumption that the effect of net wealth taxes on reported wealth is the more pronounced the more integrated the regions involved are. According to ...


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Quick and easy way is to think of a foreign currency (let's call this USD) as another good with its own demand and supply. Imports and exports When a country imports a lot (assuming it imports from the US or the invoice is in USD), the importers will need to pay for these goods in USD. To do this, they go to a bank (roughly speaking) and buy USD, pay for ...


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The loss function reflects the central bank’s policy objective (i.e. their preferences for stabilizing inflation and some real variable around target levels, in this case output), and it says that the central bank is concerned about inflation fluctuating from their target level ($\pi^{T}$) and their perception of the equilibrium output (here reflected in the ...


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