7 votes
Accepted

Why do we spread knowledge across nations?

This is a long comment that is too long for the comment box. In fact, many research projects in US are secretive, especially the ones related to military. At the same time, much, much more research ...
High GPA's user avatar
  • 1,906
6 votes
Accepted

What is a good proxy for government quality?

Using corruption is part of it but a bit restrictive way to measure government "quality". You may use aggregate indicators as the one developed by the Worldwide Governance Indicators (WGI) project ...
emeryville's user avatar
  • 6,935
4 votes

Fiscal policy in the Dornbusch model

There are some mistakes in your presentation of the Dornbusch model. $𝑝(𝑝∗)$ is the domestic (foreign) price level, $m_s$ stands for nominal money supply, $\bar{y}$ is potential output, These ...
1muflon1's user avatar
  • 55.6k
2 votes
Accepted

The Oil hike of the 2000's: Did it go unnoticed, and why?

I consider the very rapid growth of infrastructure in the BRIC countries to be a strong driver of the high oil prices (as well as other building commodities) in the mid-2000s. It takes a lot of ...
Roberto G's user avatar
2 votes

How can I calculate with the average of the consumption in an RBC framework?

Consider the risk free steady state. In that situation the Euler equation becomes: $$ \left(\frac{C_{t+1}-b \overline{C_{t}}}{C_t-b \overline{C_{t-1}}}\right)^{-\sigma}=\frac{1}{\beta \cdot (1+r)}$$ ...
BKay's user avatar
  • 16.3k
2 votes

Why the difference in productivity and wage trend in the UK economy?

Blundell, et. al (2014) offer an explanation. According to them, the UK economy experienced a positive labour supply shock over that period. First, they present the facts in a very intuitive fashion (...
luchonacho's user avatar
  • 8,591
2 votes
Accepted

Germany's current account surpluses: Negative effect? How to solve them?

As requested in comments: German banks lost a lot of money in the US sub-prime crisis and would have lost a lot more in Greece if the Eurosystem had not saved them. This is what might reasonably be ...
Henry's user avatar
  • 4,755
2 votes

In a trade imbalance does the importing country's currency become more valuable?

No. In fact the opposite happens. The value of a currency (or the exchange rate) is determined by supply and demand of the currency on the currency market. If country A imports more, the supply of ...
BB King's user avatar
  • 6,138
2 votes

Good book on capital flows?

Here are some recent books: Taming Capital Flows: Capital Account Management in an Era of Globalization (2015) Capital Flows and Exchange Rate Management (2013) Managing Capital Flows: The Search for ...
luchonacho's user avatar
  • 8,591
2 votes
Accepted

Market crash causes

This is a rather big question, and I am only attempting to give a partial answer. (This is perhaps an extended comment.) Firstly, the belief that "market crashes" (in a wide sense) are due to ...
Brian Romanchuk's user avatar
2 votes

Why did the hybrid Phillips Curve become flatter (as empirical data shows) after the crisis?

(1) The Phillips curve is not a structural thing, it is not surprising that the relationship between unemployment and inflation is not constant over time. (2) There's a nice AER paper by Simon ...
Tobias's user avatar
  • 970
2 votes

The Difference between investment and savings in CA identity

Yesterday I gave an example of an economy based on grains of wheat where the real domestic activities were Plant wheat grains, grow them and harvest them, getting more grains as a result Consume ...
Henry's user avatar
  • 4,755
2 votes
Accepted

Bretton Woods vs Gold Standard

It doesn't seem to me that there were any substantive differences between the Bretton Woods regime and the gold standard, as seen in the early 1970s Note that most of what I'm about to write is ...
Kent Shikama's user avatar
  • 1,070
2 votes

Gali (2015) Chapter 8 Symmetric Steady State

The steady state is "symmetric" in the sense that terms of trade with all other countries are equal to $1$, with respect to the home country. It would be non-symmetric if for some of them ...
Alecos Papadopoulos's user avatar
2 votes

Log-linear version of the uncovered interest rate parity

It’s derived as follows. First start with original equation. $$(1+i_t)=(1+i^*_t)\frac{S_{t+1}}{S_t}$$ Take natural logs of both sides: $$\ln(1+i_t)=\ln(1+i^*_t)+\ln(S_{t+1}) -\ln(S_t)$$ Now you ...
1muflon1's user avatar
  • 55.6k
2 votes
Accepted

What does it mean if a country's exchange rate is said to be “overvalued”?

This is hard to define because in general in economics the definition of overvaluation of currency is very vague. In economics overvaluation or undervaluation would be a deviation from a person’s ...
1muflon1's user avatar
  • 55.6k
2 votes

Why do we spread knowledge across nations?

I might be wrong but the key point is the perspective. From your question I saw a very interesting word: enemy. I understand that some entity would be against ...
Stone-standard's user avatar
2 votes

What are some examples of goods that entrepreneurship-intense?

The term "entrepreneur" is usually taken to mean something more specific than talented and skilled business people. Wikipedia for example gives several definitions, including ...
Adam Bailey's user avatar
  • 8,346
2 votes
Accepted

Dynamics of interest rates, exchange rates and bond prices within the UIP

One possible flaw in your reasoning is your assumption about what happens to bond prices when there are capital inflows. For example , suppose that the Bank of England has fixed short term interest ...
dm63's user avatar
  • 1,238
2 votes
Accepted

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

These are not synonyms and actually the terms have different meanings (with small overlap), but it is true that many emerging market economies in many settings just happen to be small open economies. ...
1muflon1's user avatar
  • 55.6k
2 votes

why does consumption not have a positive multiplier?

I think either you misunderstood your tutor or they were not clear. What they likely meant was that increase in total $C$ won’t be multiplied by multiplier. I think this is best seen mathematically. I ...
1muflon1's user avatar
  • 55.6k
1 vote

When to use a lagrange multiplier?

I wish I could leave this as a comment, but the first formulation is a solution to a maximisation problem of the form $$ \max_{C_t} \sum_{t} \beta^{t} u(C_t) \\ \text{s.t. } \quad C_t +K_{t+1} \leq (1-...
Walrasian Auctioneer's user avatar
1 vote

How does exchange rate change with respect to interests?

If by “greater”, you mean higher number It depends on how you quote exchange rate. Under American system the exchange rate between USD and euro would be given by $S=EUR/USD$ under European system the ...
1muflon1's user avatar
  • 55.6k
1 vote
Accepted

find the equilibrium level of Y

I cannot post this as a comment but the question you are asked is to find the equilibrium Y using the LM curve. All the information is given to you here, $M = 100, P = 1, r= 0.025$. This will give you ...
Ali's user avatar
  • 862
1 vote
Accepted

Are Investments positively or negatively correlated with interest rate

One quick way to reason the negative correlation is the concept of Present Value (PV). An increase of interest rate reduces the PV of cash (in-)flows occurring in subsequent periods. in the large, ...
Iñaki Viggers's user avatar
1 vote

Are Investments positively or negatively correlated with interest rate

History is plenty of different situations, but usually it works like this: Low interest rates will increase demand of borrowing money and will decrease the interest of investors in lending (they will ...
Ignacio Valdés Zamudio's user avatar
1 vote
Accepted

Why FDI stock in the same year is different in the same reports?

In note 1 of the World Investment Report 2017 (page 39), it is mentioned that FDI data may differ from one WIR issue to another as data are continually revised, updated and corrected by the ...
emeryville's user avatar
  • 6,935

Only top scored, non community-wiki answers of a minimum length are eligible