6
votes
Accepted
How to use Leibniz Rule of integration to find interest rate in Expanding Variety model
The Leibnitz rule for differentiation of an integral is a consequence of the fundamental theorem of integral calculus.
A so-called integral function is defined as
$$F(x) = \int_a^x f(t)dt\;\;\;\;\;\;\;...
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4
votes
How to handle multiple lagrange multipliers in a maximization problem?
When we allow for debt, somebody else does the lending. So our debt is an asset for somebody else. From the lender's point of view, a transversality condition arises, related to the holding of assets ...
- 33.4k
4
votes
Accepted
How to handle multiple lagrange multipliers in a maximization problem?
This is less than a full answer but hopefully will be of some help.
A general observation is that complex optimization problems do not always have an analytical solution. So although you show a ...
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4
votes
Accepted
Why do we omit the integral when deriving the f.o.c.’s in long-run growth models such as Romer (1990)?
The justification for this rule of thumb is the calculus of variations, specifically with the functional derivative.
First, note that the problem is static, so for ease of notation I'll drop the ...
2
votes
Frameworks and models in economics
What you call framework would be probably more appropriately called paradigm in philosophy of science, following the terminology set up by Kuhn in his seminal work.
There are paradigms or frameworks ...
- 54.4k
2
votes
Lagrangian for the utility-mazimization of a household in a Menu Cost model, first order condition to Ci?
This can be solved using Feynman’s differentiation under the integral sign.
By the chain rule,
$\frac{d}{dC_i} [\int_{i=0}^{1} C_i^\frac{\eta -1}{\eta} di ]^\frac{\eta}{\eta-1}$
$ = \frac{\eta}{\eta -...
- 2,196
2
votes
Revisiting development of Solow Model with no population growth and no technical progress
You can use the following results provided below to try and answer the problem yourself.
Consider a Constant Returns to Scale(CRS) production function $F:\mathbb{R}_+^2\to \mathbb{R}$
Let $Y=F(K,L)$ ...
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1
vote
Revisiting development of Solow Model with no population growth and no technical progress
To find the per-worker production function we need to divide the given production function with L i.e. $\frac{F}{L}$ = $$\frac{K^{0.3}L^{0.7}}{L}$$ $$y=\frac{K^{0.3}}{L^{0.3}} = k^{0.3}; k =\frac{K}{...
1
vote
Accepted
Decoding Endogenous vs Exogenous - Parameter vs Decision Variable - and Independent vs Dependent
Am i correct?
Most of the things mentioned are correct. Some things that are incorrect include:
Making a difference between exogenous and independent and endogenous and dependent variable. Those are ...
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1
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Decoding Endogenous vs Exogenous - Parameter vs Decision Variable - and Independent vs Dependent
I will put things much more easy.
What you presented is a a very simple utility constrained maximization problem. What is endogenous is what is determined within the model. The solutions for this ...
- 675
1
vote
2 intercepts in a probit model about WTO/GATT concessions?
The dependent variable is level of concessions, which takes on one of three values:
$y_i \in \{\text{None, Partial, Full}\}$
If you know the ordered probit model, then you should see that a dependent ...
- 805
1
vote
Accepted
How do we know Solow has DRS and Harrod-Domar has CRS from the definitions of the models?
This is just assumption on the model.
There are some functions for which you can mathematically say they always have constant returns to scale.
For example, if $F(K,L)=AK^{0.5}L^{0.5}$ then we know it ...
- 54.4k
1
vote
Accepted
Model for how the shifting of industries affect job creation
You can find an economics model of endogenous job creation across different industries in "Acemoglu, D., & Restrepo, P. (2018). The race between man and machine: Implications of technology ...
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