Grada Gukovic
  • Member for 2 years, 6 months
  • Last seen this week
  • Rostov-on-Don, Russland
What should we do if the subsample have the opposite results to the general results?
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8 votes

I'd interact the regressor you are interested in with a dummy for the country being developed and see what happens. Its entirely possible that the mechanisms at play in developed contries are ...

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Why does the Solow Model matter for undergraduate students?
7 votes

I think that the main reason why the Solow model is a must in every undergrad curriculum is the Solow residual. The fact that the bulk of the differences of per capita income between countries is not ...

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Monte carlo simulation for macroeconomist
6 votes

The main challenge in macroeconometrics as opposed to microeconometrics is a the small sample size, because of short recorded time-series and less than 200 countries providing data. To get around this ...

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When doing 2SLS, can you use OLS if the dependant variables are dummy variables?
5 votes

Using OLS on count and dummy variables is appropriate. The estimates are consistent. Using OLS instead of probit/logit is appropriate if the number of observations is sufficiently high. For example ...

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Structural shocks in economic models are unobservable and country-specific?
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4 votes

If $oil_t$ is the worldwide price of oil, neither $\rho$ nor $e_t$ are determined in a country specific model (unless the country's economy is so large that it affects global oil demand, which is not ...

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Country specific economic recession/financial crisis data?
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4 votes

Several articles use data sets on this issue but I am not sure that all the data sets are freely available. Valencia & Laeven (2012) use the IMF country reports to create their data set. It ...

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Converting monthly data to quarterly
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3 votes

I've seen them summed somewhere but I cannot exactly remember where. Ultimately I don't think that it makes much difference. The quarterly sum is just the average multiplied by three. Since local ...

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Is the fundamental analysis also a self-fulfilling prophecy?
3 votes

If a sufficient fraction of market participants follow technical analysis it can work as self-fulfilling prophecy. If some pattern occurs that technical analysis interprets as signalling an imminent ...

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How to compute elasticity of substitution in labor market of blacks and whites using experience-education groups?
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3 votes

I dont want to be rude but the only equation you copied correctly is the productivity augmented Cobb-Douglas production function. Equation 2 is equation 2 from Ottaviano, Peri (2008) (on page 8) it ...

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What does it mean to identify structural shocks in macro models?
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3 votes

A great up to date treatment that I keep coming back to is Ramey (2016). It discusses identification in both articles you refer to. The short answer to your question is that obtaining structural ...

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Derivation of aggregate demand function for Monopolistic Competition (based on Combes et. al, 2008)
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3 votes

As we have discussed in the comments, the utility function used in the book is Cobb-Douglas: $U = CM^{\mu}A^{1 - \mu}$. The well known fact mentioned in equation (3.3) on page 57 - the one that you ...

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Difference between Nash equilibrium and Pareto Efficiency
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3 votes

I wouldn't say Nash equilibrium is broader than Pareto-efficiency I'd say its different. As all know the sole Nash equilibrium in the Prisoner's dilemma is not Pareto-efficient and the three Pareto-...

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Where we call GDP aggregate demand or aggregate supply in VAR models is our choice?
2 votes

You don't provide much information. Here is what I see here. The theoretical background for the first case is the AS-AD model. The exact specification seems to be an A-type VAR. A positive aggregate ...

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Imports not used in the country, still counting in the GDP calculation?
2 votes

GDP is the total amount of domestically produced output in the referred period. If $C^H$ is the consumption of domesticly produced goods, $C^F$ is the cosumption of goods produced abroad, $G^H$ is the ...

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Is the steady state of $k$ enough to show $Y$ grows at the rate $n+g$?
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2 votes

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: $K$ ...

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Does anyone recognize the shape of this residuals vs. fitted plot?
2 votes

If you watch closely, you will find out that the slope of the lines is -1. I.e. the values of y along every one of the lines are exactly equal. That is you get this lines only because you have great ...

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Local vs. foreign currency denomination for Emerging Market Bonds
2 votes

An EME's government collects taxes in domestic currency. If it issues debt in foreign currency and the domestic currency depreciates, the value of foreign currency-denominated debt increases. For ...

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Could a "Japanese-style strike" work as it's supposed to? Under what conditions?
2 votes

Without the cooperation of at least mid-level management I dont think that such an approach can work even in theory. Management sets the quantity of ressources and intermediate goods the striking ...

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Is there an empirical model for studying contemporaneous feedback relationships?
1 votes

You need to come up with good instruments. I.e. what affects worldwide price directly and affects domestic output only through the price? What affects domestic output directly and affects worldwide ...

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Stationary vs. Non-stationary data in a BVAR model
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1 votes

I don't think that the issue is stationarity. In the original paper Uhlig uses logs of integrated variables like the CPI without transforming them further or including a time trend. From looking at ...

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what is the Intuition behind Cholesky identification in VAR/SVAR
1 votes

The terms "ordered last" or "ordered first" do not necessarily relate to the place of the variable in the $y_t$ vector. Rather they describe the column (row) vector of the ...

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Wage Growth Rate in the R&D Model
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1 votes

income is total profit plus wage income, and the two are fixed in proportions I.e. $y_t = w_t + \pi_t$ and $w_t = \alpha y_t$ and $\pi_t = (1-\alpha)y_t$, where $\alpha$ and $(1-\alpha)$ are the ...

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Duopoly vs Collusion (quadratic costs)
1 votes

Your computations are OK, but this is a trick question The total quantity set by the colluding firms and the quantity chosen by a monopolist are not the same in this question. By setting $MR = MC$ ...

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What are possible solutions when promoting competition is not applicable?
1 votes

Leaving aside the cases of platform markets and other externalities and natural monopolies, what people who have no training in economics usually miss is question of the size of the market. It may ...

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Autocorrelation function of a random walk process
1 votes

By recursive substitution you obtain $y_t = \sum_{j=0}^t e_{t-j}.$ Thus $\forall p \in \mathbb{N} \hspace{.2cm} y_{t-p} = \sum_{j=0}^{t-p} e_{t-p-j}.$ Under the usual white noise assumption for the ...

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How can an outcome be Pareto efficient but not Kaldor-Hicks efficient?
1 votes

Youre erring in the definition of Kaldor-Hicks efficiency. K-H improvement is a change where those who lose from the change, lose less than the gain obtained by those who benefit from it. Pareto ...

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Intertemporal choice with possibility of death
1 votes

It is safe to assume that if the consumer passes away, his creditors get his endowment. This actually happens in real life. $B$ should obviously be zero. As far as the second period is concerned you ...

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Price of Anarchy when the cost is to society and not to the selfish agents
1 votes

If there is a free market for the product the agent who gets the resource becomes a monopolist. "Produce more efficiently" is taken to mean "produce every quantity of output for lower cost". That is ...

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Solow Model with a Capital Stock Externality
1 votes

There is no steady state in the Solow framework. The system is explosive because $a,b >0 \wedge a+b<1 \Rightarrow a+b + (1-a) > 1$. Thus $(zK_t)^{a+b} (L_tz)^{1-a} = z^{1+b}(K_t)^{a+b} (L_t)^{...

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Specification bias - estimated variance is biased estimator of true variance of error term
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1 votes

From a) we obtain $y - \hat{y}_x = M_xy = M_xu$ and from b) $y - \hat{y}_z = M_zy = M_zX\beta + M_zu$, where $M_x$ and $M_z$ are the residual-maker matrices (the ones from the accepted answer of the ...

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