# Tag Info

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I don’t think crisis itself has set definition as opposed to recession, unless you attach some clarifier to it as the examples you mention. Generally the word is even in academic work thrown around quite loosely. For example in Romer advanced macroeconomics in the subject index for word crisis you will find: crisis; see debt crisis; economic crisis of ...

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Scenario “C” does not specify “unexpected.” Since greater growth was expected, planned inventory investment would rise to meet higher expected demand.

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In theoretical modeling the consistency is applied in the same way as in philosophy/logic. Internal consistency simply means that the argument is consistent with itself and has no contradiction within itself (as opposed to external consistency where its not enough for argument to be valid on its own but it should also not contradict other facts). A simple ...

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An answer along macro textbook lines is given by @1muflon1. A shorter answer is as follows. Consider an investor who borrows capital from household (who owns the capital, in growth models) to invest in the firm with production technology $f(k)$. The rate of return $r$ on capital for the household is the interest rate of borrowing for the investor. Each ...

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The multiplier comes from the solution to the goods market equilibrium. In economics everything is endogenous. Increase in income increases consumption that increases demand, demand increases production and production increases income. However, as an echo in a cave the initial increase in income gets 'weaker' as it cycles through the economy and the result 1/...

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What is the reason for the U3 rate being the more popularised and widely emphasised measure of unemployment in the United States and also for other developed economies? Historically, data for U-3 have been collected for longer than U-6. For example, in the US, the former have been collected since 1948, while the latter only since 1994. So, it is "...

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The elasticity of output with respect to capital will be less than 1 due to the diminishing marginal returns of capital - this is both realistic on macroeconomic scale and also one of the central assumptions of the model. According to Romer’s advanced macroeconomics, pp 12 section 1.2 assumptions: “The intensive-form production function, $f(k)$, is ...

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This is not proven in Romer but it is a well known result. To derive it mathematically you need to take the following steps: First, the capital as in Romer depreciates so the evolution of capital will be given: $$k_t = k_{t-1} + i_t- \delta k_{t-1} \tag{1}$$ where $k_t$ is the present stock of capital, $k_{t-1}$ previous stock of capital, $i_t$ is ...

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You have that in equilibrium each factor is paid its marginal product, so $$\tag1\frac{w_i}{p_i}=B_if'(l_i)$$ and $$\tag2\frac{r_i}{p_i}=f(l_i)-K_if'(l_i)\frac{B_iL_i}{K_i^2}=f(l_i)-l_if'(l_i)$$ so deviding (2) by (1) we have: $$\tag3\frac{r_i}{w_i}=\frac{f(l_i)-l_if'(l_i)}{B_if'(l_i)}.$$ Take the derivative of $r_i/w_i$ with respect to $l_i$: $$\tag4\... 2 I agree with @1muflon1 that there is no precise or unifying definition of what constitutes an economic crisis. However, do we need one? First, we can adopt a definition of the term crisis, such as "a situation that has reached a critical phase" according to the Merriam-Webester online dictionary. Next, we can attach an adjective to the crisis to ... 2 Considering GDP reflects the material means of living that a nation could achieve, this definition could be a little reductionist but works for answering your question (see materials means of living as every thing that all human could use in his life and has had to been produced). Now population always grows, and the more people there are in the world the ... 2 If you have more detailed information about what kind of expenditures you have then you can use the CPI data. Current price data for government does not exist under the price program for BLS for you to use to convert the nominal to reals. However, you can use the BEA industry data which does have a government sector price indexes for either valued added ... 2 This question is too long. To be useful for this website, questions need to be questions, without filler text. You should also try to avoid suggesting answers, as if your suggestion is wrong (as happened here), it makes it harder to answer the question. You have questions about the notion of “corporation” versus “bank.” A bank is just a type of corporation, ... 2 So, from the link posted by @Brian Romanchuk, I got this paper and got the answer: GDP = Consumption + Investment + Government spending + eXports – iMports So in the example, country A GDP would end up to be: GDPA_A = 3 000 - 2 000 = 1 000 and being correctly a smaller quantity than country B's GDP. Thanks to contributors 2 I agree with 1muflon1, but allow me to add some more nuance. Identification and calibration can be meant to express a subset of estimation. Any identified coefficient is also an estimate, but not vice-versa. An identified estimate is any estimate that fulfills certain conditions that make it the true number we want. For example, any coefficients from (... 2 Identification and estimation are often used interchangeably (at least that’s my observation from attending conferences and reading papers) but according to econometric literature there is a subtle difference. For example, in the John Stachurski, a primer in econometric theory the identification is a process of finding out if the parameters are identifiable ... 2 No because the financial markets do not provide firms with capital they provide them with funds to buy capital which is a difference. You can call those funds financial capital but it’s not capital in economic sense. In common usage in English capital is often used as a synonym for money. For example in Oxford dictionary under the word capital the second ... 2 “Private sector” financing or “non-government” financing will certainly be most clear. “Market” financing is succinct but it can be confused with “capital market” financing, that is, borrowing by issuing tradable debt instruments. “Alternative” financing is generally used to refer to non-bank, non-capital-market financing, such as borrowing from private ... 2 You can find OLG models that do not classify as DSGE (in particular, the model might not be stochastic) as well as DSGE with overlapping generations (contrary to those with infinitely lived agents). You can find more detail on this on this working paper by Assous and Duarte (2017), as they note In the early 1980s, when the real business cycle ... 2 I want to know if it's valid to talk about the economic growth and development of a city instead of a country In principle there is nothing wrong with narrowing your research question down to municipal level. There are studies that look at economic growth on urban level. Here is just an example that came out of quick google scholar search: Ding, Chengri, ... 2 As asked, this question is too vague and open-ended. But the following statements seem safe. The effect of a fiscal stimulus is to raise growth and expected growth. All else equal, the central bank would be expected to raise interest rates, and inflation would be slightly higher, but still should remain near target (or else the central bank is going to have ... 2 There is a market for inflation-linked bonds. The quoted yield on the bonds is the equivalent of a real yield, with the inflation rate corresponding to expected inflation. The real yields On US inflation-linked bonds are currently negative. Link to FRED data. There is no mystery to this. Nominal yields are effectively pinned to the expected path of the ... 2 Land would fit into production functions or many economic models the same/similar way as other factors of production. An example of general Cobb-Douglas function with land would be:$$Y(K,L,T) = A K^{\alpha}L^{\beta}T^{1-\alpha-\beta} Where $K$ is capital, $L$ labor, and $T$ land. Into most economic models land can be integrated rather easily as the ...

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It is important to distinguish between a) the total stock of building land, much of which may be already built upon, and b) that (usually small) part of the stock on which new building takes place in a particular period. A simple way to include building land within an aggregate production function for a period would be to focus on (b) as an input which, in ...

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The Fisher equation does not necessarily implies the chain of causality is from the inflation or nominal interest rate to the real interest rate. The real interest rate is given by the intersection of the IS LM curve - as shown on the diagram below. The real interest rate depends on the availability of savings. The same way as recently the futures oil price ...

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This is due to the famous Lucas critique. To make long story short, in the past in the heyday of Keynesian macroeconomics it was quite normal for macroeconomists to just postulate some relationships based on relatively casual empirical observations like for example the Philips curve which says that there is positive relationship between inflation and ...

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This is actually quite complex issue. Taken narrowly answer to your question: what is the relationship between population growth and economic growth Is that simply the relationship is positive. This is because in the question you ask only about growth of GDP per se. Growth ultimately depends on growth of production and labor is an important input in the ...

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But I don't believe that the plot will shift like this in response to such bad news, it seems to contradict what I learned about microeconomic autonomous spending (I believe that the same must be true for aggregate autonomous spending). It's spending that you just WON'T reduce, they are too critical. You will tap into your savings, you will borrow or ask for ...

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Based on the steady state your production function is Cobb-Douglas.Taking logs and derivatives wrt time of $Y$, $\frac{Y}{L}$ and $\frac{Y}{AL}$ in the steady state yields the desired result: $K$ grows with $n+g$ on the BGP. It would be interesting to know what the supervisor's objection was.

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For the households it would through the savings arrow. Borrowing from macroeconomic perspective can be and in most advanced textbooks (such as Romers advanced macroeconomics) is often treated as a negative saving. Hence when the households and businesses borrow they incur negative saving and when they repay debts it can be viewed as a positive increase in ...

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